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BUY NOW, PAY LATER: The future of credit in KSA

January 19, 2023
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The FinTech sector has been at the forefront of financial innovation and the new form of lending and payment option Buy Now Pay Later (BNPL) is the new evolution-changing dynamics in the payments ecosystem. Though the market is at a nascent stage globally as well as in Saudi Arabia, early signs signify a promising future where it could capture the largest market share among payment methods.

1. ‘Buy Now, Pay Later’ (BNPL) has been popular in Sweden, Germany and other European nations for a long time; Covid-19 and lockdowns have enforced other nations to adopt it as well

Rising Trends of Buy Now Pay Later industry globally, 2022P

  • With the rising e-commerce adoption, the popularity of BNPL also rose as the prospect of delayed payment became more attractive because of the financial uncertainty due to the spike in unemployment during the global pandemic.
  • European countries such as Sweden, Germany, and Norway are leading the BNPL market race

Market segmentation of BNPL industry- Europe, 2022P

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How does a Buy Now Pay Later transaction happen?

Integrated Shopping apps and Off-card financing solutions are business models in the BNPL space that have seen high adoption rates across the globe.

2. In KSA, BNPL as a mode of payment is receiving a great response from both retailers and customers due to the perks and convenience attached to this service

BNPL enables consumers to fetch their products upfront and retailers get paid immediately

Digital Payments are gaining a foothold in the Saudi Market as mode a of payment because more fintech are collaborating with merchants

With each transaction Via BNPL at Retailers help them in acquiring more customer base and thereby making sales

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3. As a result, the BNPL industry in KSA is growing at a CAGR of 135% between 2019 and 2022P; around 60% revenue was generated by the e-commerce giants.

Market Size of BNPL in KSA, In USD, 2019-2022P

Buy Now Pay Later industry has gained huge traction in KSA due to easy credit checks which are solely not based upon the CIBIL score, unlike credit cards. As per report, it has expanded at a CAGR of 135% between 2019 and 2022P.

Market Segmentation of BNPL by the type of end user and age group, 2022P

Around 60% of the revenue share is captured alone by e-commerce Giants in KSA in 2022P. Gen Z and the millennials remain the first ones to adopt this service due to fewer barriers to adoption, lower fees, and a seamless user experience

Type of End User Spends in the KSA BNPL market, 2022P.

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Age groups of consumers in the KSA BNPL market, 2022P.

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4. Owing to increasing adoption of cashless society the BNPL market in KSA is expected to grow at a CAGR of 25%; e-commerce giants will continue to dominate the market share.

Future Market Size of Buy Now Pay Later in KSA, In USD, 2022P-2027E

With increasing demand for extra credit line with less stringent KYC procedures, the Buy Now Pay Later market in KSA is expected to expand at a CAGR of 25% between 2022P and 2027E

Future Market Segmentation of Buy Now Pay Later in KSA by type of end user and by age group of consumers, 2022P-2027E

Revenue generated from e-commerce giants will continue to account for the majority share by around 50% in 2027E. Additionally, a gradual increase in the contribution of below 24 years of age group in market share is also forecasted.

Type of End User in the KSA BNPL market, 2022P

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Age groups of consumers in the KSA BNPL market, 2022P

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