The buy now pay later industry outlook in the United Arab Emirates

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The robust Internet infrastructure coupled with the surging e-commerce market and digital payment ecosystems has supported the growth of the buy now pay later (BNPL) industry in the United Arab Emirates (UAE). With more consumers shopping online in 2022, compared to 2021, the trend has translated into a higher adoption of BNPL schemes across the Emirati region.

In the Emirates, BNPL schemes are finding their way to new and a broader set of product categories. Consumers are no longer just using the payment option to buy smartphones. They are even willing to purchase airline tickets through the BNPL payment method. As a result, providers like Cashew are partnering with travel partners, thereby allowing travelers to access BNPL credit up to Dh 50,000 on airfares.

With the willingness of consumers to fund more of their purchases across categories, consumer behavior is opening doors to new industries for BNPL providers in the Emirates. The surging cost of living and rise in prices of products means that BNPL providers are forging new partnerships to offer BNPL services to consumers in the United Arab Emirates. For instance,

• In October 2022, Cashew, one of the leading BNPL services in the Emirates, announced that the firm had entered into a strategic collaboration with du, a telecom provider in the UAE. Under the collaboration, Cashew will offer BNPL solutions on device financing for du’s customers. This will enable consumers to purchase devices, at zero-additional cost, which were previously out of their budget.

From the short to medium-term perspective, PayNXT360 expects more such BNPL providers to enter into strategic collaborations to offer the payment method in the travel, education, insurance, and healthcare sectors in the UAE.

To accelerate its growth in the domestic market, Cashew also announced that it is seeking to raise US$70 million. As part of its mega fund-raising round, the firm is already in negotiations with family offices in Saudi Arabia and venture capital firms in the United States and Singapore. With the demand for BNPL schemes growing in the Emirati market, PayNXT360 expects the firm to receive healthy interest from global investors, including venture capital and private equity firms.

Furthermore, UAE-based BNPL providers are also targeting growth in other regional countries to drive the next growth phase of their deferred payment service.

• In September 2022, Tabby, the Emirati-based leading BNPL provider, announced that the firm is expanding operations into the Egyptian market. In the UAE, the firm works with many leading brands, including Faces, In Your Shoe, Ariika, Marcqa, Floward, and Lacoste, among others.
• With more than two million active shoppers in the Middle East region, the firm has decided to expand in Egypt after securing US$275 million in funding, since inception, from global and regional investors.
• In October 2022, the firm also entered into a strategic collaboration with YouGotaGift, one of the leading digital gift card marketplaces in the region. Under the collaboration, the two firms will allow consumers and shoppers to buy gift cards using the BNPL payment method offered by Tabby.

The partnership comes at a time when the year-end holiday and gifting season is about to commence in the Emirates. Consequently, PayNXT360 expects the service to garner traction among consumers from the short-term perspective.

To know more and gain a deeper understanding of the BNPL industry in UAE, click here.