The Buy Now Pay Later (BNPL) industry in the UAE is expected to see steady growth in the coming years. With an annual payment projection of $2.45 billion by 2024, the sector is anticipated to grow at a CAGR of 12.4% during 2024-2029. The market is expected to witness a rise in the BNPL gross merchandise value from $2.07 billion in 2023 to $4.41 billion by 2029, as per a recent report on the Buy Now Pay Later Market. This growth story is further supported by robust e-commerce penetration in the region, as more consumers turn to online shopping.
The surge in BNPL popularity can be attributed to the Covid-19 pandemic that drove shoppers online, leading to a boost in global BNPL loans. In 2023, BNPL loans generated $75 billion in online spending, marking a 14.3% increase from the previous year. This trend has continued in the UAE, where the BNPL payment sector has seen significant growth over the past few years. The Central Bank of the UAE has also introduced new regulations to oversee BNPL services, ensuring that businesses providing such services operate under licensed financial institutions.
Several fintech companies have entered the BNPL space in the UAE, indicating a growing interest in the payment method. Astra Tech’s subsidiary, Quantix Technology Projects, recently received a license from the CBUAE to offer microfinancing services. Alif, a global fintech firm, launched its financial services suite in the UAE market, including products like buy now pay later, send now pay later, and fly now pay later. The increasing adoption of BNPL, along with new entrants in the market, is expected to drive growth in 2024.
With authorities focusing on regulating the BNPL sector, the industry is poised for sustainable growth in the next few years. The central bank’s new guidelines for BNPL firms aim to ensure a safe and secure environment for consumers. Firms in the region are raising debt and equity rounds to expand their product offerings and meet the growing demand for payment solutions like BNPL. Tabby, a prominent UAE-based BNPL firm, secured $700 million in debt financing from JPMorgan and extended its Series D round to $250 million in 2023, showcasing the strong investor interest in the sector.
In conclusion, the Buy Now Pay Later industry in the UAE is set for significant growth in the coming years, driven by increased e-commerce penetration and consumer adoption of BNPL payments. With new regulations in place and a surge in funding rounds from fintech firms, the sector is well-positioned to meet the rising demand for flexible payment solutions. The market’s projected growth trajectory indicates a promising future for BNPL in the UAE, making it a key player in the evolving landscape of digital payments.
