BNPL competitive landscape in the UAE

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The competition in the BNPL market in the UAE is intense with more and more retailers and fintech companies rolling out BNPL to cater to cost conscious customers. Fintech companies are looking for opportunities to offer alternative payment options to cater to these cost conscious customers especially due to the economic crisis cause by COVID-19. Moreover, consumers are shifting towards online shopping owing to the pandemic which could benefit the BNPL market.

The BNPL trend is picking up in the UAE as more retailers are aligning with fintech players to offer flexible payment options such as BNPL to shoppers. For instance, of the local retailers, Al-Futtaim Group was one of the early adopters of BNPL in alignment with tabby, a UAE based BNPL startup. As per initial indications, customers are willing to spend 5-20% more when given the BNPL payment option. Al-Futtaim Group launched BNPL option for its online shopping website muudha.com and its watches and jewelry platform.  

Al-Futtaim Group also unveiled BNPL option for its ACE Hardware and Toys R Us stores with plans to extend it to its other brands in automotive and retail segments. Al-Futtaim also partnered with valU, a fintech firm, in August 2020, to offer six-months of interest free payment plans to its customers . Moreover, the Landmark Group, retail and hospitality conglomerate, partnered with Tabby in November 2020 to offer BNPL to its customers .

Rise in online shopping and BNPL have become two prominent retail trends in the UAE since the onset of the pandemic. BNPL acts as an alternative to credit cards especially for millennials and Gen Z who have trouble getting access to credit cards and paying their interest.

Fintech startups are thriving in the UAE BNPL market. For instance, In June 2020, Tabby received US$9M funding from Raed Ventures as well as contribution from MSA Capital and Arbor Ventures, its existing investor, for its growth and launch in Saudi Arabia . To grow its business, the startup engaged with over 20 regional online retailers including Golden Scent and the Apparel Group, which includes brands such as Aldo and Tommy Hilfiger. Also, Tabby partnered with DHL, a logistic firm, to handle its COD payments.

Later in December 2020, Tabby received US$23M funding from Abu Dhabi state investor Mubadala and Arbor Ventures, to support its business growth by scaling its engineering and product capabilities as well as its lending capacity. In just a year, Tabby has partnered with over 500 merchants which include regional and global brands. Moreover, Tabby partnered with Visa in November 2020 to join the Visa’s Fintech Fast Track program which could accelerate its integration process with Visa and allow it to leverage its global reach, security and capabilities . It also joined the Saudi Arabian Central Bank’s regulatory sandbox.

Tabby allows shoppers to defer payments for up to 30 days or spilt payment into four equal monthly installments. It charges merchants a fee for sales generated via its platform and claims to improve transaction sizes by 30% to 85% and conversion rates by 20%.