One of the key drivers of recent MENA eCommerce growth has been the adoption of Buy Now Pay Later (BNPL) services. As a merchant, it's important to understand the factors surrounding this popular payment option and how it can benefit your business:
* BNPL is the fastest-growing payment option in the MENA region, with projections estimating it will reach $6.5 billion by 2026 at a CAGR of 37%.
* Not all BNPL services are created equal, and it is essential to consider the options you want to provide customers, such as the ability to spread or delay payments and whether you want to offer commercial financing.
* One key demographic that has greatly adopted BNPL services is the younger customer segments, with over 60% of users being under 35 who want to avoid revolving credit card interest. Listen to Hosam Arab, CEO of Tabby, who recently discussed these topics on Couchonomics with Arjun.
* By making finance options easily available at the point of sale, BNPL addresses the unbanked and nearly-banked customer segments, providing an alternative to revolving interest from credit cards.
* It’s essential to note that while payments may be interest-free, customers who fail to make payments are subject to late fees and penalties which are levied by the BNPL provider and frequently not in control of the merchant.
* Currently, BNPL is unregulated, but legislators around the globe are looking closely at changing this status to provide better consumer protection and prevent a BNPL consumer debt bubble.
In conclusion, the growth of BNPL is a clear indication of changing consumer habits and preferences in the region and is likely to accelerate in the coming years.
Next time, Apaya will be discussing the factors merchants should consider when selecting the right partner or partners for their business. Stay tuned.