by Over the past few years, Buy Now Pay Later (BNPL) has emerged as one of the most popular payment methods, especially among millennials and Gen Z consumers. These consumers prefer BNPL as it allows them to buy expensive items in installments without paying any interest. According to a report by Bain & Company, the BNPL industry is expected to grow over three times to reach $5 billion in the MENA region by 2025.
BNPL platforms provide a seamless checkout experience to consumers where they can split the payment of their purchase into four equal interest-free installments over six weeks. They act as a bridge between merchants and consumers by financing the purchase. BNPL has gained immense popularity across verticals like fashion, electronics, home appliances, flights, hotels etc. Its popularity is attributed to instant approval decisions, flexibility of repayment options, and most importantly – no interest financing.
Key factors driving BNPL adoption in MENA and CIS
There are several factors that are driving the adoption of BNPL platforms in the MENA and CIS regions:
Growing e-commerce industry: The e-commerce industry in developing s like MENA and CIS Buy Now Pay Later Platform is witnessing strong growth. This has increased online shopping and opened up avenues for alternate payment methods like BNPL.
Low credit card penetration: Credit card penetration is quite low in these regions compared to developed countries. For instance, credit card penetration in the MENA region stands at only around 15-20%. Hence, consumers find BNPL platforms as an attractive alternative to credit cards when they shop online.
Rise of digital payments: The pandemic has accelerated the digital transformation in these regions. More people now prefer contactless payments via digital means like mobile wallets, UPI etc. BNPL fits well within this trend as it provides a digital payment mechanism.
Consumer behavior shift: Younger consumers are driving this shift towards deferred payments. They prefer spreading out large purchases into interest-free installments for better budget and cash flow management. This easy repayment flexibility attracts them to BNPL.
Emergence of new BNPL startups
Several new BNPL startups have emerged in these regions to tap into this large opportunity. Some of the popular players in MENA and CIS Buy Now Pay Later Platform include:
Tabby: Founded in 2017, Tabby is one of the largest BNPL providers in the MENA region. It is currently present in Saudi Arabia, Egypt, and UAE. Tabby has collaborated with retailers like Namshi, Toys “R” Us, and Noon.
CASHE: CASHE is another popular BNPL startup based in Dubai. They have a strong presence in UAE, KSA, Kuwait, Oman, Jordan and GCC countries. CASHE provides interest-free payment installment plans for both online and in-store purchases.
Spotii: Spotii was founded in 2020 and is a leading BNPL platform in India, UAE, and Saudi Arabia. They also have physical stores in Dubai where shoppers can use BNPL. Some key merchant partners include Noon, Awok, and Emax.
Blend: Blend provides BNPL services in Egypt, Lebanon and Pakistan. Their target consumer base includes young professionals, students and blue-collar workers. Apart from shopping, they also enable BNPL for expense like mobile recharge, bills payments etc.
PayLater: PayLater is a Kazakhstan-based BNPL player which also recently expanded to other CIS s like Russia, Ukraine etc. They have a wide merchant network across categories like fashion, electronics, beauty, travel etc.
Regulatory landscape and future outlook
Given the nascent stage of MENA and CIS Buy Now Pay Later Platform in these regions, the regulatory frameworks are still evolving. Central banks and regulators are carefully monitoring this new lending model to ensure consumer protection. Some positive regulations already implemented include capping late fees, restricting repetitive loans, subjecting BNPL providers to same lending rules as banks.
Overall, the BNPL in MENA and CIS regions is expected to witness exponential growth over the next few years driven by high adoption rates among younger demographics. As the industry matures, we can expect more innovations around different repayment tenors, instant underwriting using AI/ML and tie-ups with larger merchants and billers. Strategic partnerships between global BNPL giants and regional startups will also be key to tap into unique needs and opportunities. With the right regulatory approach, BNPL has the potential to revolutionize payments and credit landscape in these developing economies.
*Note:
1. Source: Coherent Market Insights, Public sources, Desk research
2. We have leveraged AI tools to mine information and compile it
