RIYADH: 鈥楤uy now, pay later鈥� is gaining popularity in 萝莉视频 thanks to the country鈥檚 youthful population embracing new ideas around personal finance, according to a top executive at Dubai-based shopping platform tabby. 

Speaking to Arab News, the company鈥檚 general manager for the Kingdom, Abdulaziz Saja, said a traditional wariness around the use of credit cards in the region is allowing his firm鈥檚 business model to tap into a burgeoning market for delayed payments.

According to an analysis of the BNPL industry in 萝莉视频 published in October, the sector is expected to have grown by 69.4 percent on an annual basis to reach $321.4 million in 2021.

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

鈥淭his generation, which is tech-savvy and willing to embrace disruptive solutions, combined with a growing desire to take control of their financial freedom, makes BNPL an attractive option,鈥� Saja said, adding that 70 percent of tabby鈥檚 Saudi customers are under 30 years old, and the majority are women.

tabby has over a million users in 萝莉视频 and the UAE and is set to grow further in the region.

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

Saja said his firm is 鈥渃ommitted to 萝莉视频鈥� adding: 鈥淲e are here for the long haul, the Kingdom is our home with over 80 percent of our total users.鈥�

The BNPL industry seems to be succeeding where credit card companies have struggled, as their traditional products fail to be Shariah-compliant.

鈥淭he region has a relatively low penetration of credit cards compared to more mature markets and for good reason. People are skeptical of traditional financial institutions taking advantage of them with interest and hidden fees. The market was ripe for a player to change the way we shop,鈥� said Saja, who explained that tabby allows shoppers to split purchases into four monthly payments, free of charge, so long as they pay on time. 

鈥淲hile credit cards rely on interest and late fees paid by consumers, at tabby we make 90 percent of our revenue from merchants. While we do charge late fees on defaulted payments, these are capped and nonrecurring,鈥� Saja said.  

Abdulaziz Saja, tabby鈥檚 general manager for the Kingdom.

According to the Q2 2021 BNPL Survey, the medium-to-long-term growth story of the industry in 萝莉视频 remains strong.

BNPL payment adoption is expected to grow steadily over the next seven years, recording a compound annual growth rate of 27.9 percent between now and 2028. 

The BNPL Gross Merchandise Value in the country is forecast to increase from $189.7 million in 2020 to $1.8 billion by 2028.

There are concerns the BNPL model promotes impulse buying and pushes consumers into financial over-commitment. Saja rejects this notion and said: 鈥淢ost BNPL platforms, tabby included, firmly believe in responsible spending and the overall financial well-being of their users. 

鈥淲e want people to have the ability to buy the things they want without it becoming a burden. We are steadfast in promoting a business model that is built on trust, not interest. 

鈥淏NPLs are merchant funded and so have a much lower appetite lending to risky customers that don鈥檛 have the means to pay. The same simply cannot be said about credit cards. 

鈥淚f you鈥檙e late on a credit card payment, you can still use the card letting interest compound month over month which is what it鈥檚 designed to do. With tabby, we stop the usage of the service, and our late fees are capped to help you stay in control of your finances.鈥�