Prime Highlights:
BNPL services are now used by 77% of Saudi consumers to pay for essential purchases, according to a report published by Tabby recently.
First-time BNPL use tends to be on necessary expenditures such as education or medical bills rather than discretionary expenditure.
The average value of essential spending through BNPL is more than the non-essential spending, indicating a demand for funding more expensive essentials.
Key Background:
The fintech sector in Saudi Arabia is experiencing a dramatic overhaul, and BNPL services have quickly become the go-to form of payment for most consumers. Recent figures from Tabby, the leading BNPL provider, reflect that 77% of consumers in Saudi Arabia are now using BNPL to pay for important purchases, which means that trends in financial transactions are turning around.
The report indicates that first-time BNPL consumers are more likely to spend on essentials such as education and medication, rather than on discretionary products. Moreover, this increased reliance on BNPL for essential products like insurance and homeware has contributed to its percentage share in consumer spending. For the third time, again, the average value of essential BNPL spending surpasses that of discretionary spending.
BNPL has changed the way consumers spend through its very flexible, interest-free repayment terms. BNPL seems to be an alternative way to credit cards or a loan. BNPL remains an attractive mode for those who are either younger and less affluent in terms of income. Positive regulatory environment and growing competition from local players are also pushing growth in BNPL. As said by Arjun Vir Singh, partner at Arthur D. Little, the rise of e-commerce, accelerated by the COVID-19 pandemic, has further fueled the adoption of BNPL. This trend is expected to extend into offline retail as digital payment solutions continue to dominate.
BNPL will be disruptive of traditional credit models, and new expansion in the lines of travel, real estate and B2B financing would come its way and create scopes for the consumers as well as business to use it for better gains. Retailers have already gained through higher values in transaction and higher loyalty through BNPL; the potential marketing strategy shall also help them unlock much growth.
