BNPL To Make Inroads; More Banks Open To Tie Up With Fintechs

Buy Now Pay Later (BNPL) is expected to make further inroads in Qatar’s financial landscape with more banks set to sign strategic pact with fintechs providing "growth enabling" services, according to experts.

"The lenders are seized of its (BNPL) opportunities in the banking space. Fintechs are enablers than competitors, there is a symbiotic relationship between the two," said a top official of a private sector bank, which is planning to enter in a strategic relationship with BNPL provider.

This symbiotic relationship leverages the strengths of both entities, leading to a "win-win" situation, according to him.

The streamlining and strengthening of operations at the Qatar Credit Bureau have also helped fintechs offering BNPL services to undertake quick due diligence regarding customers, the official said.

Recently, Qatar Islamic Bank tied up with PayLater to deliver Shariah-compliant BNPL services to customers and merchants in Qatar, providing flexible financing solutions that promote financial inclusion and support the growth of the nation’s digital economy.

BNPL, which is gaining momentum in the Middle East and North Africa region, is essentially a short term (no more than 12 months) interest free credit facility that allows a customer to split its transaction amount into instalment payments to allow repayment over a period of time.

The maximum credit per customer at any point of time has been fixed at QR25,000, as per the Qatar Central Bank (QCB) regulations for the sector.

The tech-savvy consumer base, the quest to explore the latest in online shopping and the alternative payment solutions with flexibility are giving the required thrust (for the BNPL segment), said the bank official.

The QCB had approved five companies – Spendwisor; Qaiver FinTech; HSAB for Payment Solutions; Mihuru; and Pay Later Website Services – as a first cohort for the BNPL service; awarding entry into its exclusive sandbox programme.

The banking regulator had in 2023 issued the BNPL regulations following the launch of its fintech strategy. 

The objectives of the BNPL regulations are to ensure that customers are provided with adequate protections without unduly impacting the availability and cost of BNPL products and services, to protect the rights of BNPL customers from unfair lending practices, and to encourage the development of the consumer credit industry.

Terming that BNPL isn’t a trend — it’s a shift in mindset; Mohammed al-Delaimi, SkipCash’s founder and managing director, had said it introduces financial flexibility and responsible consumption, particularly in markets that have traditionally been underserved or cash-dependent.

For small businesses, it means increased sales and better customer retention, while for consumers, it’s a lifeline to spread out essential purchases without falling into debt traps, he had said.

The changing consumer preferences and the growing e-commerce market are paving the way for strong growth, the bank official said, adding the rise in e-commerce deals during the Covid-19 lockdowns led to a significant increase in the use of BNPL services.

Snoonu had earlier this year joined forces with PayLater to enhance financial flexibility and reshape the digital shopping experience for consumers. Beema recently tied up with PayLater.

LuLu AI, the investment arm of LuLu Financial Holdings, had announced a strategic investment in PayLater Qatar.