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Tamara CEO Says Data Refutes BNPL’s Debt Trap Myth

At a time of growing investor concerns and a retracting investment landscape that has led to a dip in valuations of many global firms, it’s fair to say that the ability to secure a 9-figure raise in the buy now, pay later (BNPL) space, where giants such as Klarna and Affirm have been severely hit, is no small feat.

Read more: Klarna’s 85% Haircut Sees BNPL Investors Shooting First, Asking Questions Later

That is what Saudi Arabia BNPL firm Tamara recently achieved with the announcement of a $100 million Series B round this month, a raise which firm CEO Abdulmajeed Alsukhan said underlines the growing investor interest in the Middle East and North Africa (MENA) region.

Related news: BNPL Firm Tamara Picks Up $100M in Series B 

And although MENA FinTechs have not been completely immune to the global fundraising winter, the fact that another key MENA BNPL player, Tabby, also secured $150 million in debt financing this month, seems to affirm Alsukhan’s assertions about the region’s investment potential.

Also related: BNPL Provider Tabby Gets $150M Loan to Expand in MENA

“There has been an uptick [in investment] and it’s still continuing. There are amazing young talents in the region that are now in positions to make a change in a very rich, highly populated, underdeveloped region [so] investments in such an environment makes absolute sense,” he remarked.

He added that for Tamara to get to 3 million customers in less than two years of operation in the small Gulf Cooperation Council (GCC) market also highlights other key factors driving the impressive pace of investment growth. “We’re not Brazil or the U.S., we’re only 50 million people in the GCC. [That] says a lot about how amazing the infrastructure is and how supportive the government is.”

Debt Trap? The Data Proves Otherwise

Tamara’s megaround is even more of a silver lining considering the intense global backlash BNPL providers have faced in recent years around concerns over consumers taking on too much debt. This has led to urgent calls for regulatory oversight of these entities extending credit.

In its home base, the Saudi firm has obtained a permit — “a lighter version of a license,” Alsukhan previously said — enabling it to operate in the sandbox environment and scale under the supervision of the Saudi Central Bank (SAMA) which oversees the BNPL space in the region.

But although lenders are being treated like a licensed entity, there is not yet a license that is specific to BNPL, Alsukhan explained. It’s why lenders continue to collaborate with central banks and regulators, not just in Saudi but in other GCC countries, to design a roadmap and a plan for how industry regulation will evolve.

“It’s an industry that requires some flexibility [and] once it gets too complicated, it will become costlier [for us] to provide the service as we do today. So, there is that thin line for the regulator to play with [and] at the same time the industry [has] to make sure that at the end of the day the customer is protected as per the law,” he noted.

See also: Saudi BNPL Firm Tamara Raises $110 Million Led By

Finally, he cautioned against unfounded negative publicity around the product, pointing to data that refutes the BNPL debt trap myth.

“We see the data. We work with our customers day and night. We’re way better compared to credit cards and bank loans. We’re not a debt trap. No one can say a BNPL player who provides a $100 loan on average is putting people in a debt trap,” Alsukhan strongly argued.

BNPL 2.0 Hits MENA Market

Moving forward, he said they see themselves as more than just a BNPL provider, and have a goal to engage more with customers, know them better, lead them to the right sellers, and enable those sellers to increase their sales efficiency.

Further reading: BNPL Was ‘Highly Needed’ Across MENA, Where Banks Now Play Catch-Up With FinTechs

“We want to do all that we need to increase the delight of [MENA] shoppers and ensure financial inclusion by providing the right credit facilities and making payments seamlessly. This is where we’re doubling down on.”

And in line with the BNPL 2.0 business model that is gaining traction around the world, Alsukhan summarized Tamara’s next phase of growth in a nutshell.

“It’s an ecosystem for people to improve and personalize their shopping experience and [we want] to be more than the old passive payment methodologies that we have grown to know. We want to make sure that you [have access to the right goods and services] while also enabling the sellers to find the right buyers.”

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About: The findings in PYMNTS’ new study, “The Super App Shift: How Consumers Want To Save, Shop And Spend In The Connected Economy,” a collaboration with PayPal, analyzed the responses from 9,904 consumers in Australia, Germany, the U.K. and the U.S. and showed strong demand for a single multifunctional super apps rather than using dozens of individuals ones.


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