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Tabby Remains Independent Amid Increasing Consolidation in MENA BNPL Space









Buy now, pay later (BNPL) has taken the payments industry by storm, as harsh economic situations, especially in the wake of the pandemic, have pushed consumers to find alternatives to high-interest card payments for their everyday purchasing needs.

For cash-centric regions like the Middle East and North Africa (MENA), the offering has gained wider popularity among local consumers eager to postpone payments on purchases and hold on to cash as much as possible.

It was this opportunity that Hosam Arab wanted to tap into with the launch of Tabby in February 2020, offering customers and retailers an interest-free payment solution that addresses the pain points they face in a market where payment methods and payments as a whole are significantly underdeveloped.

The payment methods “lacked flexibility [and] they were high on friction, so most customers essentially just chose to pay for the eCommerce purchases in cash, which for an online retailer presented a lot of complexity and obstacles to growth,” Arab, the startup’s CEO and co-founder, told PYMNTS in a recent interview.

Since then, BNPL has exploded in the Middle East and North Africa (MENA) market and wider Gulf Cooperation Council (GCC) region, with the arrival of new competitors vying for a slice of the pie. But Arab is of the view that the brand name recognition and market share it has gained as part of its first mover advantage continues to give the firm a leg up on the growing competition.

Today, the firm is one of the leading BNPL providers in Saudi Arabia and the United Arab Emirates (UAE), raising $50 million in a recent Series B round from Delivery Hero and existing investors that valued the firm at $300 million and brought its total funding to over $130 million in less than two years.

Related news: BNPL Firm tabby Nets $50M, Ups Value To $300M

The business to business to consumer (B2B2C) company works with over 2,000 global brands including Adidas and Ikea, as well as small and medium-sized businesses (SMBs). The Tabby app has more than 400,000 active shoppers with 3,000 daily downloads and earlier this year, the BNPL provider unveiled its own loyalty program, offering a cash-back incentive to users who shop with the Tabby app.

eCommerce Penetration, Fragmentation and Regulation

In June, the Dubai-based firm entered a strategic partnership with New York-headquartered, card-based BNPL service, Splitit, with the aim to offer existing tabby merchants and customers additional white-label solutions like the opportunity to extend installments on credit cards.

Read more: Middle East’s BNPL Firm Tabby Teams With New York’s Splitit

Arab said the deal, which did not involve any form of equity exchange, holds commercial value for both sides, enabling tabby access to new products and giving Splitit access to a new market.

On its own expansion plans, Arab said Tabby will be assessing opportunities based on eCommerce penetration, market fragmentation and the overall landscape in terms of the dominant players it will have to compete with.

Apart from the UAE and Saudi Arabia, the firm is currently active in Kuwait and Bahrain, and is working toward launching in the rest of the GCC — Oman and Qatar — within the next couple of months, he said.

By design BNPL is a very local business, he also said, which means that a new player has to incorporate local payment methods to be successful.

What that further introduces is the need to abide by local rules and regulations, he said, which can pose an obstacle if they’re not considered seriously. “Are there heavy regulations on [BNPL], are we able to operate within the market, is the regulator willing to play ball or are they going to be very restrictive?” he noted as some of the questions they’ll be looking to answer before making any decisions.

Consolidating the MENA BNPL Space 

A consolidation buzz has overtaken MENA and the wider GCC region as recently launched local startups team up with international players looking to penetrate the booming eCommerce markets.

In April of this year, Tabby’s Saudi counterpart Tamara raised $110 million in a Series A round from U.K.-based FinTech unicorn, Checkout.com. Australian BNPL giants Zip and Afterpay quickly followed suit, with Zip announcing the acquisition of Dubai-based BNPL FinTech Spotii for $26 million in May and Afterpay injecting $10 million into UAE player Postpay in June.

Arab said even though the speed at which the consolidations happened was somewhat surprising, the moves were “bound to happen” because a market the size of the GCC couldn’t “house four competing local brands” for long.

Moreover, Tabby being the first major player in the market and outraising most of the competition left them with little choice but to partner with global players, as local venture capital firms were unlikely to fund other local startups when one startup raising larger amounts of capital.

According to Arab, another reason for the “rapid land grab” taking place in the region’s BNPL market is the fact that there are very few places or markets left globally that haven’t been tapped by global players, especially when sizable eCommerce markets are taken into consideration. It explains why these global firms are rushing in before local players scale considerably and crowd out the space, he explained.

That has left Tabby as the sole independent local player in the market, but Arab is not fazed and is focused on building out the solution across the region on its own. He added that the Middle Eastern firm has links to big players who could help it expand its product offerings, but the opportunity is significantly bigger than exiting to a local or to a global player at this stage.

As he said, “we are the local player that has prided itself on independence since our early days and we will continue to do that.”





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