UAE’s ‘buy now pay later’ payments set to hit $2.45 billion in 2024

Medium to long-term growth story of the BNPL industry in the country remains strong

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Published: Wed 21 Aug 2024, 5:52 PM

Last updated: Wed 21 Aug 2024, 7:20 PM

The UAE’s Buy Now Pay Later business (BNPL) is expected to grow at a steady pace over the medium term with payments projected to grow by 18.5 per cent on an annual basis to reach $2.45 billion in 2024.

The medium to long-term growth story of the BNPL industry in the country remains strong. BNPL payment adoption is expected to grow steadily over the forecast period, recording a CAGR of 12.4 per cent during 2024-2029. The BNPL gross merchandise value in the UAE will increase from $ 2.07 billion in 2023 to reach $4.41 billion by 2029, a report on Buy Now Pay Later Market released recently said.

This report provides a detailed data-centric analysis of the Buy Now Pay Later (BNPL) industry, covering market opportunities and risks across a range of retail categories. With over 75 KPIs at the country level, this report provides a comprehensive understanding of BNPL market dynamics, market size and forecast, and market share statistics.

BNPL exploded in popularity as the Covid-19 pandemic forced more shoppers online, and the product has continued to resonate with consumers. Global BNPL loans drove $75 billion in online spending in 2023, up 14.3 per cent from 2022, according to Adobe Analytics.

In the UAE, the market has been thriving over the past few years. The BNPL payment industry in the Emirates has recorded strong growth over the last four quarters, supported by increased e-commerce penetration. The Central Bank of the UAE announced new regulations to oversee BNPL services in December 2023. According to the CBUAE, businesses providing BNPL services must operate as agents of licensed banks or financial institutions, with approval from the central bank.

Recently, Dubai-based consumer technology holding firm Astra Tech's subsidiary Quantix Technology Projects was granted a licence by the Central Bank of the UAE, offering microfinancing to UAE residents. The fintech company offers personal loans, short-term credit, auto loans, BNPL (Buy Now, Pay Later), RNPL (Rent Now, Pay Later), SNPL (Send Now, Pay Later) and more to the residents.

Alif, one of the leading global fintech firms, launched its financial services suite in the UAE market in September 2023. The financial services suite includes products like send now pay later, buy now pay later, and fly now pay later, among others. The report said the rising uptake of the payment method among shoppers, coupled with new entrants in the sector, will support the growth trajectory of the market in 2024. Existing BNPL providers are also raising funding rounds from venture capital and private equity firms.

“With the market poised for growth over the next three to four years, authorities have been looking to regulate the unregulated sector. In the Emirates, the central bank has issued new guidelines for BNPL firms, requiring them to get licensed to operate in the market. The guidelines, coupled with the rising adoption, are projected to support sustainable industry growth over the next three to four years,” said the report.

“Firms are raising debt and equity rounds to further scale their product offering in the region. The demand for payment solutions like BNPL is poised to grow further in 2024. Consequently, to better serve consumer demand, firms are raising capital through debt and equity rounds in the Emirates,” said the report.

Tabby, one of the leading UAE-based BNPL firms, announced that the firm had secured $700 million in debt financing from JPMorgan, while also extending its Series D round to $250 million in November 2023. The capital round further strengthens the position of Tabby in the domestic and regional markets, where it manages more than $6 billion in annualized transaction volume. Tabby, notably, serves more than 10 million users and has partnered with over 30,000 brands.