No “competition” between Saudi Arabia and United Arab Emirates: senior Mubadala official


RIYAD: “Buy now, pay later” is gaining popularity in Saudi Arabia as the country’s young population embraces new personal finance ideas, according to a senior executive at the Dubai-based tabby shopping platform.

Speaking to Arab News, the company’s managing director for the Kingdom, Abdulaziz Saja, said a traditional mistrust of credit card use in the region allows his company’s business model to tap into a market. booming for late payments.

According to a BNPL industry analysis in Saudi Arabia released in October, the sector is expected to have grown 69.4% on an annual basis to reach $ 321.4 million in 2021.

Saja believes it is the demographic makeup of the Kingdom, where two-thirds of the population is under 35, that is behind this growth.

“This tech-savvy generation willing to embrace disruptive solutions, combined with a growing desire to take control of their financial freedom, makes BNPL an attractive option,” Saja said, adding that 70% of tabby’s Saudi clients are under 30 years old. years, and the majority are women.

tabby has over a million users in Saudi Arabia and the United Arab Emirates and is expected to grow further in the region.

In August, she raised $ 50 million in a fundraiser valuing the company at $ 300 million, and recently signed a partnership with online fashion platform Styli.

Saja said his company was “committed to Saudi Arabia,” adding, “We are here for the long haul, the Kingdom is our home with over 80% of our total users. “

The BNPL industry appears to be successful where credit card companies have struggled, as their traditional products do not comply with Sharia law.

“The region has relatively low credit card penetration compared to more mature markets, and for good reason. People are skeptical of traditional financial institutions that take advantage of them with hidden interest and fees. The market was ripe for a player to change the way we buy, ”said Saja, who explained that tabby allows buyers to split their purchases into four monthly payments, for free, as long as they pay on time.

“While credit cards depend on interest and late fees paid by consumers, at tabby we derive 90% of our income from merchants. Although we charge late fees on defaulted payments, these are capped and non-recurring, ”Saja said.

Abdulaziz Saja, general manager of tabby for the Kingdom.

According to the BNPL survey for the second quarter of 2021, the medium to long-term growth of the industry in Saudi Arabia remains solid.

BNPL payment adoption is expected to grow steadily over the next seven years, registering a compound annual growth rate of 27.9% by 2028.

BNPL’s gross merchandise value in the country is expected to grow from $ 189.7 million in 2020 to $ 1.8 billion by 2028.

Some fear that the BNPL model promotes impulse buying and pushes consumers into financial over-commitment. Saja dismisses this notion and says, “Most BNPL platforms, including tabby, strongly believe in responsible spending and the overall financial well-being of their users.

“We want people to be able to buy the things they want without it becoming a burden. We are determined to promote a business model based on trust, not self-interest.

“BNPLs are funded by merchants and therefore have a much lower appetite for lending to risky clients who cannot afford to pay. The same cannot be said for credit cards.

“If you’re late on a credit card payment, you can still use the card leaving the interest compounded month after month, which is what it’s designed to do. With tabby, we stop using the service and our late fees are capped to help you stay in control of your finances.

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