Fintech Trailblazers: Inside UAE’s Buy‑Now‑Pay‑Later Revolution

The UAE’s financial landscape is undergoing a seismic shift. What was once dominated by credit cards and traditional lending is now giving way to agile, app-based microcredit solutions. At the forefront of this transformation is the Buy-Now-Pay-Later (BNPL) model—a fintech innovation rapidly capturing consumer attention across the Emirates.

BNPL services are reshaping how people shop, borrow, and manage money, offering flexible, interest-free payment solutions at checkout. From luxury malls in Dubai to grocery stores in Sharjah, the option to “split payments” has gone mainstream—and behind this fintech frenzy is a dynamic group of UAE-based entrepreneurs, developers, and investors who are rewriting the rules of credit.

Welcome to the BNPL revolution—one driven by digital-first startups, youth adoption, and a regulatory ecosystem willing to evolve. This is the inside story of how fintech trailblazers are changing the way the UAE thinks about money.

What Is BNPL and Why Is It Booming in the UAE?

Buy-Now-Pay-Later allows consumers to purchase goods and services immediately and pay over time, usually in four or more interest-free installments. Powered by mobile apps and real-time credit decisioning, BNPL offers a simpler, faster alternative to:

• Credit cards

• Personal loans

• Post-dated checks

Why it’s taking off in the UAE:

• Young population: Over 70% of UAE residents are under 40, digitally native, and prefer seamless app-based transactions.

• High smartphone penetration: UAE boasts some of the world’s highest mobile usage rates.

• Low credit card usage among youth: BNPL offers access to credit without traditional banking barriers.

• E-commerce surge: Online shopping has exploded post-pandemic, and BNPL enhances conversion rates.

Pioneers Leading the Charge

1. Tabby: The Flagship Fintech

Launched in 2019, Tabby has quickly become the UAE’s most prominent BNPL player. Founded by arab news, Tabby started by offering payment plans for fashion and electronics and now supports a wide range of retail categories.

Key stats:

• Partnerships with over 10,000 merchants

• Accepted by brands like IKEA, SHEIN, and Noon

• Raised hundreds of millions in funding from global VCs

• Expanded operations to Saudi Arabia and beyond

Tabby’s success lies in its focus on consumer trust, with no interest or hidden fees and seamless integration into retailer apps and websites.

2. Tamara: Cross-Border Innovation

Although founded in latest arab news, Tamara has a strong UAE presence and has become a BNPL favorite among local consumers. Its rapid adoption is driven by:

• Slick UI/UX

• Arabic-language support

• 24/7 customer service

• Zero-cost installments

Tamara recently introduced in-store BNPL terminals in major malls—bringing BNPL into brick-and-mortar retail.

3. Cashew: Homegrown Challenger

Founded in the UAE, Cashew differentiates itself by offering longer-term plans (up to 12 months) and financing for services like education, travel, and healthcare.

Cashew partners with banks to manage risk while providing users with:

• Instant loan approvals

• Transparent repayment terms

• Loyalty points and cashback options

This model positions Cashew not just as a BNPL provider but as a hybrid fintech-lending platform—a model gaining traction across the region.

How BNPL Is Changing Consumer Behavior

1. Redefining Credit for the Next Generation

Traditional credit cards come with:

• High interest rates

• Annual fees

• Complex terms

BNPL, on the other hand, offers:

• No fees (if paid on time)

• Simple, app-driven controls

• Real-time approvals

For many UAE residents—especially Gen Z and young expats—BNPL is their first access point to credit.

2. Driving E-commerce Growth

Merchants that integrate BNPL report:

• Higher conversion rates

• Bigger basket sizes

• Lower cart abandonment

For example, Tabby claims that retailers see 30-40% increases in average order value when BNPL is enabled.

3. Shifting Loyalty and Payment Preferences

Consumers are now choosing where to shop based on BNPL availability. Retailers not offering installment plans risk falling behind in both online and offline sales.

Sectors Seeing Rapid BNPL Adoption

While BNPL began in fashion and electronics, it’s now expanding into:

1. Travel

Split payments for flights, hotels, and vacation packages—especially popular during Eid and school holidays.

2. Education

Tuition fees, course enrollments, and even exam coaching centers are offering BNPL to make learning more accessible.

3. Health and Wellness

From dental procedures to aesthetic clinics, patients now have the option to pay in installments—opening new markets for medical providers.

4. Groceries and Everyday Retail

BNPL is being integrated into quick-commerce platforms, making it easier to manage household budgets.

The Business Behind BNPL: How It Works

BNPL firms operate by:

• Paying the merchant upfront on behalf of the customer

• Collecting payments from the customer over time

• Charging transaction fees to merchants

• Imposing late fees or interest (selectively, and often capped)

The focus is on building trust, volume, and merchant networks. While margins are thin, the real opportunity lies in:

• Data monetization

• Financial product upselling

• Embedded insurance and loyalty features

Regulatory Outlook: The Central Bank’s Watchful Eye

As BNPL grows, regulators are stepping in to ensure:

• Consumer protection

• Fair lending practices

• Licensing of fintech firms

The UAE Central Bank has initiated dialogues with leading BNPL providers to craft a regulatory framework that balances:

• Innovation and scalability

• Financial transparency

• Risk mitigation

New policies may require BNPL firms to:

• Partner with licensed banks

• Conduct affordability assessments

• Offer dispute resolution systems

So far, the response from industry players has been positive—many view regulation as a sign of long-term legitimacy.

Challenges Facing the BNPL Boom

Despite growth, BNPL faces several hurdles:

1. Overuse and Consumer Debt

While BNPL is marketed as interest-free, users who overextend themselves can fall into repayment difficulties. Firms are investing in:

• AI-powered credit risk models

• Soft credit checks

• Real-time affordability scoring

2. Late Payment Risks

Some firms cap or waive late fees to avoid consumer backlash—but this reduces profitability and increases default risk.

3. Merchant Pushback

BNPL providers take 2–6% of the transaction value as a fee, which some retailers view as high compared to credit card processors.

4. Market Saturation

Multiple players in the same space means rising customer acquisition costs and a race to the bottom on fees.

Beyond BNPL: What’s Next for UAE’s Fintech Scene?

BNPL is just the beginning. UAE fintech ecosystem is evolving toward:

1. Embedded Finance

Where financial tools are integrated into everyday apps—from ride-hailing to e-learning.

2. Credit-Building BNPL

Some platforms are offering users the option to report repayments to credit bureaus, helping them build formal credit histories.

3. Shariah-Compliant BNPL

Tailored products that align with Islamic finance principles, avoiding interest-based models.

4. Cross-Border Installments

Allowing consumers to purchase from global merchants with localized BNPL services.