1. Awareness of BNPL platforms reach critical mass, usage to increase
UAE consumers have shown an even split in terms of BNPL awareness while the adoption of these platforms is still relatively low. This is possibly a result of the early stages of BNPL platforms entering the UAE market. Typically, in more mature BNPL markets such as the USA, Millennials drive the adoption and usage rates. We see a similar trend in the UAE.
2. Availability of BNPL and cash management are critical use case for BNPL
The most important reasons for BNPL usage in the UAE is related to their availability on check-out and managing personal budgets. While non-usage is driven by a preference towards paying for the product or service in full. Interestingly, consumers in the USA have indicated that they use BNPL platforms primarily to avoid credit card interest and to avoid credit checks. This highlights a key difference between the regions, possibly due to income levels and cultural differences.
3. Multiple players have entered the market recently; Investors are supporting the BNPL ecosystem
As is evident in the following table, BNPL players in the UAE have only just entered the market and have cumulatively received approximately $40 million+ in funding. BNPL players around the world have partnered with retailers in fashion the most out of other sectors. One possible reason for this focus on fashion is the need for strong credit checks for categories which have higher value products. Another reason for global BNPL players focusing on this sector is the intentional targeting of low order value impulse purchases, which is made easier with the help of BNPL options. Currently North America holds a large proportion of global BNPL market share while the MENA region has shown early signs of BNPL awareness and will continue to grow with additional investor support.
4. BNPL platforms are expected to grow towards the final stages of awareness in the coming year
As BNPL platforms increase their partnerships and reach their target consumers, their platform awareness and usage is expected to increase. Global BNPL players showed similar levels of engagement before a few key partnerships pushed them over the top to gain a significant amount of market share. While their use and adoption is still on the lower side, we expect UAE BNPL platforms to grow towards a medium to high level of awareness and usage in the coming year.