In the Middle East and North Africa (MENA), buy now, pay later (BNPL) arrangements have transformed from a simple payment option into a mainstream financial tool that gives consumers greater flexibility while helping merchants boost conversion rates and basket sizes.

Looking ahead, the industry is poised to witness continued momentum and evolution, fueled by increased adoption of artificial intelligence (AI), expansion beyond traditional retail categories, and the rise of the “super-app” model, according to a new report by Amazon Payment Services, in collaboration with MENA’s BNPL leaders Tabby and Tamara from Saudi Arabia, as well as Valu from Egypt.

BNPL expands beyond traditional categories

Though fashion and electronics remain dominant categories in MENA’s e-commerce BNPL landscape, the report highlights the expansion of BNPL facilities beyond these traditional categories to include education, travel and insurance.

Across the Gulf Cooperation Council (GCC), rising demand for private education is creating pressure on families and institutions alike. This has prompted Classera, an edtech company, to introduce installment plans for school fees, an addition that has resulted in a 42% increase in adoption and a 28% drop in late payments.

In travel, BNPL arrangements are already unlocking high-value experiences. Cleartrip, an online travel agency from India, is recording a 10% BNPL adoption rate in United Arab Emirates (UAE) bookings, underscoring how BNPL arrangements are making luxury holidays and long stays more accessible.

Finally, in insurance, rising premiums for car, health and home coverage are creating affordability barrier. To address this, insurance providers are introducing BNPL arrangements to make more coverage accessible while easing costs.

Underscoring the success and relevance of BNPL in insurance, GIG Gulf has reported a 42% growth in installment payment adoption between 2021 and 2024, driven by rising demand for comprehensive coverage. The company has also observed a strong uptake after events, such as the Dubai floods, with customers upgrading from basic to comprehensive plans.

Expanding digital ecosystems

In addition to the expansion of BNPL into new categories, the Amazon Payment Services report notes that the industry is undergoing a profound transformation, fueled by smarter, user-first innovations across the purchase journey, increased cross-industry integration, and more seamless omnichannel experiences.

It notes in particular the growth of the all-in-one digital ecosystem, or the super-app, which combines shopping, banking, and lifestyle services. These ecosystems will further embed flexible payments into everyday life.

In parallel, BNPL platforms are increasingly evolving into broad financial ecosystems. Tamara, for example, is working on becoming a financial lifestyle app, combining credit tracking, brand discovery, and services like travel and healthcare. In Egypt, Walid Hassouna, CEO and founder of Valu, sees BNPL converging with regulated consumer finance, with longer tenures and interest-bearing models that reduce reliance on merchant subsidies.

Linking BNPL with rewards is another area of opportunity, with businesses starting to integrate loyalty programs directly into checkout, allowing customers to redeem points from banks or brands alongside BNPL payments. In this area, Egypt’s Valu says that it is seeing rising demand for rewards, exclusive experiences, and bill-payment tools, which it finds encourage retention, particularly among unbanked and underbanked users.

Omnichannel commerce, personalization and sustainability

The report also predicts that the focus will shift from simple technology integration to improving customer journey by reducing friction, and creating more intuitive end-to-end experiences. This will materialized by deeper integrations that make online and offline transactions more seamless, AI-driven personalization, and immersive technologies such as augmented and virtual reality.

It also highlights increasing integration of online and offline channels. In the UAE and Saudi Arabia, where shopping malls remain central to the retail culture, in store point-of-sale (POS) has become the fastest-growing channel for BNPL. Tamara is aiming to tap into this opportunity, aggressively expanding its omnichannel presence and allowing customers to move effortlessly between online, in-store, and app-based experiences.

Tabby has also seen strong growth in-store, prompting it to launched in 2022 the Tabby Card. The card allows users to shop online or in-store, and gives them the option to split purchases into installments.

Similarly, in Egypt, offline channels remain dominant, but new card-linked options are allowing users to tap BNPL options seamlessly across channels.

Finally, the last trend outlined in the report is sustainability. As BNPL scales, sustainability will rely on financial discipline and robust regulatory frameworks, the companies said.

Valu emphasized Egypt’s leadership in establishing early oversight and consumer protection standards, positioning the country as a regional benchmark for responsible lending. Echoing this view, Tabby stated that growth, financial inclusion, and consumer protection must advance together.

The release of the report comes at a time when Amazon Payment Services is aggressively expanding across MENA. Over the past year, the payment processing company has announced a series of partnerships with BNPL players, payment networks, and local payment providers to expand its offering. Currently, it claims to offer a range of BNPL services and credit card installment options in partnership with over 25 banks across MENA.

Featured image: Edited by Fintech News Middle East, based on images by rawintanpin and generative ai via Freepik