In today’s fast-paced world, flexibility and convenience in payment options have become increasingly important. In the years following the pandemic, consumers have become more price-sensitive than ever, whilst their aspirations to purchase goods and services are constantly growing. Enter Buy Now, Pay Later (BNPL) Services – transforming the way consumers shop and manage their finances. While the consumers’ purchasing ability increases, sellers can sell more. Does this sound like a win-win situation? Because it is! 

BNPL’s rise to prominence is by virtue of the multiple benefits the model provides over conventional credit cards, including its interest-free value offering, transparent execution, and soft check requirements. The region has seen an increase in the usage of BNPL services, driven on the back of key players such as Tabby, Tamara, and Cashew. 

Read on to find out more.

BNPL adoption has doubled in UAE and KSA 

The Buy Now, Pay Later (BNPL) industry has experienced massive growth in the UAE and KSA. In 2022, 1 in 10 consumers was using BNPL services, but by 2023, this figure had doubled, with 1 in 5 consumers leveraging BNPL options for their purchases. This surge highlights the increasing adoption and trust in BNPL as a convenient and flexible payment solution in these regions. 

BNPL Market is Consolidated and is Ripe for Growth

The BNPL market in the UAE and KSA is becoming increasingly consolidated, dominated by two major players: Tabby and Tamara.  

The competitive space is witnessing significant shifts, with companies like Spotii closing down, signaling a market shakeup. At the same time, Tabby has raised USD 200 Million at a valuation of USD 1.5 Billion, and Tamara has raised USD 340 Million at a valuation of USD 1 Billion in 2023. Both the players, have established a substantial market dominance, positioning themselves as leaders in the MENA BNPL space. 

Conclusion    

While funding, product fit, and favorable regulations have helped the segment scale, companies now need to expand sectors, and product portfolios while assessing profitability and risk 

In the next leg of its evolution, the sector needs to focus on sustainable growth. To achieve this, BNPL players will need to expand their reach into new sectors to broaden their customer base. They will also have to enhance profitability by diversifying their product offerings and exploring strategies to optimize profit margins. However, the most significant challenge will be the need to effectively assess credit risk to ensure the sustainable growth of the sector. 

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