We are happy to announce our investment in the $23m Series A investment round of tabby, the leading Buy Now Pay Later provider in MENA. Based in the UAE and KSA, tabby enables more than 500 retailers to offer deferred payments and monthly installment plans to both online and in-store customers, at zero cost to the buyer.
Adoption of innovative payment solutions in MENA has accelerated tremendously over the past year, driven mainly by the COVID-19 pandemic. The best example is Saudi Arabia that witnessed a 174% surge in contactless transactions, which represents $7.3bn (~SAR 27.5bn) and 91% of total POS transactions in September 2020 –up from 66% a year before. Within contactless transactions, mobile payments increased 6x to represent 25% of total POS transactions, compared to 8% a year before.
E-commerce penetration has been rapidly growing as consumer behaviour shifts from traditional retail to online, with MENA’s e-commerce market growing 25% annually. Moreover, 8% of GCC households have purchased online in 2020, up from 2% in 2015. While penetration in MENA lags behind penetration in developed markets, which ranges between 16% and 25%, we remain enthusiastic about future prospects as there is still much room to grow.
Despite these positive trends, credit card penetration in Saudi Arabia and MENA (33% and 29%, respectively) has significant growth potential compared to developed markets. This under-penetration, coupled with the lack of options for deferred payment and tightened credit policies across banks in the region, makes us strong believers in the potential of better access to financial services for consumers via credit digitization.
We are delighted to contribute in increasing access to credit for millions across MENA as we partner with tabby to tackle the promising Buy Now Pay Later sector. tabby’s value proposition resonates with both buyers and merchants:
Buyers: Buyers enjoy flexible payment terms (defer paying for up to 30 days, or pay in 4 equal monthly installments) online and offline, in real time and at zero interest or fees as long as they pay their monthly installment on time.
Merchants: Through direct integration into checkouts or POS systems, merchants benefit from improved checkout conversion (+20%) and an increase in purchase frequency and higher AOV (+30% to 80%). In exchange, tabby charges them a commission on sales generated via its platform.
So far, the company has seen impressive market adoption of its offering: customers can now use its services across more than 500 integrated merchants, including leading global brands like IKEA, Toys R Us and Ace Hardware, as well as regional retail giants including Al Futtaim Group, Landmark Group, and Apparel Group.
We strongly believe that Co-founders Hosam Arab, who previously co-founded and led Namshi as CEO, and Daniil Barkalov have the perfect combination of experience, market understanding, vision, approach, and technological aptitude to create the market leader and enable buyers and merchants across MENA.
Our co-investors in this round include a mix of new and existing investors, including Arbor Ventures, Mubadala Capital, Global Founders Capital, Raed Ventures, Jameel Investment Management Company (JIMCO), Global Ventures, VentureSouq, Outliers Ventures, HOF Capital, and Arab Bank.
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