‘Buy Now, Pay Later’ (BNPL) offerings appear to be the flavour of the season, with numerous e-commerce, bank, and store offering such deals for the forthcoming holiday season. Even without a credit history, a large number of borrowers benefit from BNPL’s short-term credit.
The BNPL payment plans is the latest rage among cash-strapped millennial customers looking for fast pleasure.
Meanwhile, Tabby, a Dubai-based buy now, pay later (BNPL) platform that allows customers to shop, pay later, and earn cash from over 3,000 worldwide brands including Adidas, IKEA, and Bloomingdale, has raised $54M in a Series B funding.
It comes on the heels of Tabby’s initial Series B investment of $50M, which valued the firm at $300M in August. This extension round was co-led by Sequoia Capital India and STV (STV co-led the first Series B round). Arbor Ventures, Mubadala Investment Capital, and Global Founders Capital (GFC) were among the existing investors who took part.
Founded in 2019 by Hosam Arab, Dubai-based Tabby works with retailers to give customers the option of deferring payment for goods for up to 30 days or paying in four equal monthly instalments at no cost.
According to the company, the BNPL provider has raised a total of $104M in Series B fundraising and intends to use this extension round to expand its consumer product offering and enable its international expansion.
Since its inception three years ago, Tabby has raised about $185M in debt and stock. The inclusion of Sequoia Capital in its capital structure provides much-needed expertise, considering the firm’s global stakes in BNPL enterprises such as Capital Float and Tillit.
“The reason I think we see this is that we’re not just eliminating credit card transactions in our industry, but we’re displacing a far larger consumer expenditure, which is cash,” Hosam Arab, co-founder and CEO of Tabby said.
“Approximately 70 to 80 percent of online purchases are cash-based, and when we offer this type of payment mechanism to consumers, they embrace it with open arms.” So that’s one of the key reasons we believe for the tremendous increase we’ve seen: adoption in our market exceeds that in any other area we’ve looked at globally.”
Arab stated that his company’s transaction volume increased 8x from last August and 50x between the previous year and 2020.
Its two primary markets are Saudi Arabia and the United Arab Emirates. Saudi Arabia, according to Arab, accounts for the lion’s share of the company’s transaction volume, owing to strong customer adoption and rising online transactions.
According to him, an unexpected incident is that these Middle Eastern countries, while still in their infancy, appear to be embracing BNPL at checkout faster than other established economies. The CEO stated that upon introduction with a new retailer, Tabby sees approximately 20% of the store’s consumers choose BNPL as their first option at checkout, increasing over time to between 30% and 40%.
The company boasts of more than 1.1M active users who shop with over 3,000 brands on a monthly basis. These users generate over 3M clicks for the company’s partners. According to the firm, retailers that use tabby as their payment solution have seen a more than 10% decrease in the use of cash on delivery by their customers.
Tabby claims to be working with seven of the GCC’s ten top retail groups, which appears to be more than any other regional BNPL provider, including Spotti, Postpay, and Tamara. They are all supported by worldwide players including Zip, Afterpay, and Checkout.
The Dubai based startup competes with the likes of Square Point of Sale, Shopify POS, Heartland Retail, Lightspeed Retail.
Tabby’s next destination is Egypt, where it intends to expand. Arab sees the North African country as an appealing market with underbanked customers looking for ways to readily spend online outside of what is already available to them, namely cash. Smaller players such as Sympl, Shahry, and Khazna will compete with the company.
Apart from global development, Tabby is aggressively expanding its staff and will use the money to hire more expertise and invest in its product.
“Consumer-centric digital financial services delivered in real-time and without friction can enable commerce to thrive and benefit the ecosystem as a whole.” “We continue to be optimistic on businesses that can do so at scale,” said GV Ravishankar, Sequoia India’s managing director.