The value of “Buy Now, Pay Later” (BNPL) market is the Middle East region was $7.18 billion in 2021 and is expected to reach around $89.27 billion by 2030 and poised to grow at a compound annual growth rate (CAGR) of 32.31% from 2022 to 2030.
BNPL is an option that helps the consumers to make payments in the future in a shorter period of time instead of making the payments right away. This financing option it’s becoming extremely popular as it is almost always free of interest and helps in providing flexibility to the consumers by providing credits. This option can be used to purchase anything from electronics to medicines add food or grocery.
In the Middle East region there are many retailers who offer this option for the purchases that one makes. Small amount is taken in the form of down payment and then a schedule for monthly payments or smaller emirs are offered to the consumers.
This form of payment is gaining popularity for shopping online. There are different companies that offer the buy now pay later program but it does not have any standard format for operation. About 25% of the amount it’s taken as a down payment.
According to a report from Precedence Research, a global market research and consulting firm across industry verticals, the Middle East region’s BNPL market has grown exponentially during the pandemic due to the increased use of e-commerce.
As there is a growing awareness about the BNPL in the region, which happens to be an alternate for the payment options, it has created a great opportunity for the growth of the market in the coming years, the report said.
As the region has a large amount of young population which is under the age of 30, this market is expected to grow. This also provides affordability among the young which is making an increased use of this payment option.
As the amount is paid over a period of time which is spread in the form of EMI this market is expected to grow in this region. Even the elder population is also utilising this option as they too do not have regular income.
As on today, BNPL is a great alternative for availing credit in the market and is expected to grow well in this region. The various participants in this industry in the Middle East region are trying various partnerships and mergers and acquisitions in order to expand their business.
Major market players are also investing a large amount of money in research and development activities which will be helpful in providing better technological aspects to the market.
The repayment schedule of buy now pay later markets is fixed and the tenure is a few weeks or sometimes it may extend to a few months. A wide range of purchases are covered under this market but not all the purchases that a consumer makes are eligible for it.
Due to an increasing use of the e-commerce platforms for various purchases, the BNPL market is expected to grow by 2030. Although there is no interest charged on most of the platforms that provide the service of buy now pay later but in case a consumer skips one of the payments or exceeds the date he may we charged a late fee. If the consumers skip the payments forest epilated period of time and if it happens very often the credit score of the consumer may be hampered.
BNPL does not require a good credit score in order to opt for the service. Another most important reason for the growth of this market is that it offers credit with zero interest or sometimes with an interest which is low compared with the credit cards.
The COVID-19 pandemic had disrupted the economic conditions in the Middle East region. There has been a great growth in this market due to an extensive use of online platforms and availability of Internet connection.
The report also said that t BNPL market providers are expected to have better strategic partnerships with the banking institutes in order to provide a more accessible service. After the growing demand for buy now pay later market many new firms are expected to enter this market and the market is expected to grow at a good rate in the coming years.