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Buy Now Pay Later (BNPL) Legalities in UAE

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Staff Writer, TLR

Published on July 14, 2023, 17:41:00


UAE, BNPL, afterpay, digital payments, consumer, online shopping, pandemic, merchants

With the surge in e-commerce shopping platforms, buy now, pay later (BNPL) services are picking pace in the UAE. Offering flexible instalment plans and lower interest rates, these platforms are making shopping more accessible and affordable for consumers across the region. The platforms that let you buy now, and pay later in the UAE are - Tabby, Spotti, Postpay, Tamara, Cashew Payments, Aramex Smart, Rise, and Afterpay.

BNPL service is an instalment loan that allows you to split your purchase into several equal payments. In some cases, you have to pay a certain amount upfront, whereas other services allow you to simply check out and pay later.

Emergence of BNPL
This digital revolution presented an opportunity for e-commerce businesses to develop, adapt, and thrive. This is where BNPL came in, giving the ability to add value for merchants and consumers in the e-commerce business at a time when it was needed the most. The idea of deferred payments grew naturally appealing during the pandemic because of widespread financial insecurity. With BNPL platforms consumers could continue to buy but now have the option of paying in instalments to preserve their personal cash flow at no additional expense. Furthermore, the concept alleviated the burden of cash on delivery (COD) payments, which amounted to more than 60% of e-commerce sales in the region before the epidemic.

Importance of BNPL
In these times of economic instability, and as the pandemic continues to wreak havoc worldwide, BNPL solutions are eclipsing credit cards more conveniently and transparently to fund transactions. Over the last two years, e-commerce has developed, and with the epidemic forcing consumers to shop from behind their screens, it has aided BNPL’s popularity. Digital BNPL shopping is new to the region, where consumers have typically been wary about paying for items before receiving them.

BNPL is creating the future of digital payments worldwide
As the pandemic raged on, our worlds shifted towards online platforms, accelerating e-commerce adoption around the world. In fact, in the middle east alone, customers purchase online 50% more than before the outbreak.

BNPL effectively handles today’s most familiar consumer difficulty: the need for rapid pleasure, which is hampered by the inability to pay in advance. BNPL creates a balance between the desire for immediate purchasing and the necessity for long-term budgeting. Hence, customers spend more but feel much better about it because they can extend the payment over time with no interest or fees. This pattern is directly influencing the conversion and increasing basket sizes at the checkout. Consumers turn to it as their preferred payment method. More than 60% of Millennials do not have credit cards in their names.

Consumers in their twenties and thirties are crucial audiences for BNPL platform. They earn money and want to spend it, but they are also becoming more knowledgeable and take budgeting safeguards. As a result, around 67% of Millennials currently use BNPL services. These platforms not only resonate with the consumer’s personal experience, but they also serve as a mechanism to fuel e-commerce growth in the region and assist merchants in surviving, if not thriving, in the face of a pandemic.
As time goes on, it becomes clear that BNPL is here to stay for the long term. Key global corporations have expressed interest in the regional market and local players. BNPL will become the standard across e-commerce platforms, as the digital payment environment evolves. The BNPL revolution is here, and it is time for consumers and merchants to participate in and reap the rewards.

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