BNPL emerges as the preferred payment option for Saudi consumers

BNPL emerges as the preferred payment option for Saudi consumers
According to a recent report from leading BNPL provider Tabby, 77 percent of Saudi consumers now use BNPL for essential purchases. Shutterstock
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Updated 27 December 2024
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BNPL emerges as the preferred payment option for Saudi consumers

BNPL emerges as the preferred payment option for Saudi consumers

RIYADH: The fintech landscape in Saudi Arabia is rapidly transforming daily financial practices, with buy now, pay later services gaining significant popularity. This shift is simplifying access to flexible payment options, reshaping how people manage their finances and make purchases across the nation.

According to a recent report from leading BNPL provider Tabby, 77 percent of Saudi consumers now use BNPL for essential purchases. 

Data from Tabby shows that first-time BNPL transactions are twice as likely to be for necessary items rather than discretionary ones, with education and medical expenses at the forefront. This indicates that a large portion of BNPL usage is dedicated to essential transactions rather than non-essential wants.

Tabby’s data also reveals that the average value of essential purchases made through BNPL is higher than that of discretionary spending. This suggests that while consumers are prioritizing needs, BNPL offers an accessible and affordable way to purchase high-value necessities, such as insurance and home goods.

Impact of BNPL

By allowing payments to be spread over an extended period, BNPL has revolutionized shopping habits. Not only does it provide consumers with more control over their finances, but it also alters their relationship with businesses.

In an interview with Arab News, Tarabut CEO Abdulla Al-Moayed explained that the rise of BNPL among Saudi consumers can be attributed to several factors. 




Tarabut CEO Abdulla Al-Moayed

“BNPL’s interest-free installment structure makes it an attractive and Shariah-compliant payment option for many Saudi consumers — a positive shift from traditional credit cards or loans,” he said.

“Because BNPL offers a low-barrier alternative to traditional credit, it doesn’t require a high credit score or lengthy approval process, making it accessible to a wider population, particularly younger and lower-income individuals. The ease of using BNPL through mobile apps and online platforms also aligns well with a generation that values convenience and speed,” Al-Moayed added.

He also pointed out that the supportive regulatory environment in Saudi Arabia has fueled the rapid growth of fintech solutions, leading to the emergence of various local BNPL providers. This increased competition has ultimately led to better services and offerings for consumers.

Arjun Vir Singh, partner and global head of fintech at business intelligence firm Arthur D. Little, offered another perspective on the surge in BNPL adoption. He noted that the e-commerce boom, accelerated by COVID-19, has significantly driven the growth of BNPL among consumers. Singh also emphasized the growing convergence of online and offline shopping experiences. 




Arjun Vir Singh, partner and global head of fintech at business intelligence firm Arthur D. Little. Supplied

“As customers’ journeys and payment methods in-store and offline become increasingly digital, we expect BNPL adoption to expand into this segment as well,” he said.

Singh further explained that digital payments, seamless integration, merchant sponsorship, and the rising cost of living have all contributed to BNPL’s rapid growth.

BNPL vs. traditional credit

Singh noted that BNPL is beginning to disrupt traditional credit models in consumer finance, a trend that is expected to expand as BNPL adoption spreads across sectors like travel, real estate, and automotive. “Arguably, the biggest impact will come if BNPL successfully expands into the B2B credit and financing segment,” he stated.

Singh also highlighted that banks and credit card companies are already responding to the rise of BNPL by adjusting their consumer finance offerings. Many are now partnering with BNPL providers or collaborating with major players like Visa and Mastercard, which are concerned about losing consumer spending. Some banks are even developing their own flexible payment solutions that mimic the BNPL model.

For Al-Moayed, the simplicity, transparency, and digitalization of consumer credit will force traditional credit models to adapt.

“Traditional credit models that rely on rigorous background checks and higher entry barriers need to evolve quickly while still managing risk effectively, in order to appeal to a broader consumer base and offer more flexible, secure, and customer-friendly credit options,” he said.

He also emphasized the role of Open Banking in this evolution, saying it could revolutionize credit risk management by utilizing real-time and historical behavioral data. “Open Banking has the potential to make a significant impact by giving lenders more agile and secure access to data, enabling personalized credit solutions,” Al-Moayed added.

As BNPL expands consumer spending power, he believes that as the market matures, empowered consumers will become more financially literate, leading to better-informed financial decisions. 

“Open Banking will help by providing enriched data to improve insights into consumers’ financial health, preventing unsustainable debt,” he said.

Al-Moayed also pointed out that early adopters of Open Banking will gain a competitive edge by providing more intelligent financial services, better user experiences, and faster, more affordable options for all consumers.

Singh concurs, noting that as traditional players adjust to the changing landscape, innovation in consumer finance will continue to flourish. “This shift includes segmenting customers based on different criteria, using alternative data to enhance credit models, and adapting models to the nature of the spend. Innovation is also extending to customer service, not just credit models,” Singh said.

Merchants and BNPL

“Retailers have been the greatest sponsors of BNPL, helping to legitimize and drive the growth of e-commerce,” said Singh. This was initially true for e-commerce platforms, but as more retail experiences shift online, BNPL adoption among merchants has grown exponentially. “The adoption of digital payment solutions across all retail models is driving BNPL growth,” Singh added.

Arthur D. Little’s proprietary research has shown that merchants are seeing substantial benefits from BNPL, including increased average transaction values, more frequent purchases, access to new customers, and lower customer acquisition costs. Merchants also enjoy a differentiated offering compared to their competitors.

Al-Moayed agrees that BNPL offers numerous advantages for merchants but suggests that more value could be unlocked by leveraging the data collected on consumer behavior and spending patterns. “Merchants should explore how to use this valuable data to offer personalized promotions or product recommendations,” he said.

“Hyper-personalized sales and marketing will be key to increasing customer engagement and loyalty. This will soon be expected across the Kingdom’s retail market,” Al-Moayed added.

The future of BNPL

“Over the next few years, BNPL services will become even more integrated into the broader financial ecosystem, using Open Banking to enhance personalization and accessibility,” said Al-Moayed. 

He also foresees the global adoption of big data and artificial intelligence further enhancing the BNPL customer experience. “We may see BNPL providers developing educational tools to help consumers manage their financial health effectively while using these services,” he added.

Singh, however, envisions a different future for BNPL. “BNPL will expand into the B2B segment, particularly as a tool to service underserved micro and small businesses,” he said. 

Singh also predicts that AI, enhanced regulations, and market consolidation will all play crucial roles in BNPL’s future growth.


Saudi electronics spending up 4% according to official POS data

Saudi electronics spending up 4% according to official POS data
Updated 22 sec ago
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Saudi electronics spending up 4% according to official POS data

Saudi electronics spending up 4% according to official POS data

RIYADH: Saudis spent SR170.6 million ($45.4 million) on electronic devices between Feb. 16 and 22, marking a 4 percent increase compared to the previous week.

According to the latest point-of-sale transactions bulletin issued by the Saudi Central Bank, this sector was one of the few that registered positive growth during the week.

Outlays on clothing and footwear saw a 3.4 percent increase in transaction value to SR873.1 million, with transactions growing by 2.9 percent to 6.5 million.

Expenditure on furniture also saw boosts, surging 3.3 percent to SR359.3 million, while hotels followed with a 2 percent rise to SR367 million, and recreation and culture recorded a 0.9 percent uptick to SR269.7 million. 

In contrast, overall POS transactions in Saudi Arabia declined by 2.1 percent, dropping to SR13 billion from SR13.3 billion the previous week, as spending in other sectors cooled, revealed the bulletin issued by SAMA.

Similarly, spending on food and beverages recorded a decrease of 3.7 percent to SR1.904 billion, claiming the largest share of the total POS value. Expenditure in restaurants and cafes followed closely, recording a 1.7 percent decrease to SR1.903 billion. 

Miscellaneous goods and services accounted for the third biggest POS share, with a 3.7 percent downtick, reaching SR1.5 billion. 

The leading three categories accounted for approximately 41 percent, or SR5.3 billion, of the week’s total value.

At 11.6 percent, the most significant decrease occurred in spending on jewelry, leading total payments to SR262.7 million. 

Expenditures on public utilities followed, dipping by 7.7 percent to SR52.3 million, while spending in the health sector recorded a 7.3 percent fall to SR749.6 million.

Geographically, Riyadh dominated POS transactions, representing around 35.3 percent of the total, with expenses in the capital reaching SR4.6 billion — a 2.6 percent decrease from the previous week. 

Jeddah followed with a 1.2 percent dip to SR1.8 billion, and Dammam came in third at SR646.2 million, down 2.1 percent. 

Tabuk experienced the most significant decrease in spending, falling 5.6 percent to SR229.4 million. 

Hail and Makkah followed, with declines of 1.9 percent and 0.1 percent, bringing their respective totals to SR196.9 million and SR555.8 million.

Tabuk and Makkah saw the largest decreases in terms of number of transactions, slipping 5.8 percent and 3.3 percent, respectively, to 4.3 million and 8.4 million transactions.


Global debt marches to record high, raising risk of bond vigilantes, IIF says

Global debt marches to record high, raising risk of bond vigilantes, IIF says
Updated 26 February 2025
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Global debt marches to record high, raising risk of bond vigilantes, IIF says

Global debt marches to record high, raising risk of bond vigilantes, IIF says
  • $7 trillion rise in global debt was less than half of the 2023 increase

LONDON: The global debt-to-GDP ratio rose for the first time since 2020 last year, as the world’s debt stock hit a new year-end record of $318 trillion and economic growth slowed, an Institute of International Finance report showed on Tuesday.
The $7 trillion rise in global debt was less than half of the 2023 increase, when expectations of Federal Reserve interest rate cuts sparked a borrowing surge. The IIF warned, however, that so-called bond vigilantes could punish governments if rising fiscal deficits persist.
“The increasing scrutiny of fiscal balances — particularly in countries with highly polarized political landscapes — has been a defining feature of recent years,” the IIF said.
Market reactions to fiscal policies in the United Kingdom brought down the short-lived tenure of Prime Minister Liz Truss in 2022, while similar pressures in France ousted Prime Minister Michel Barnier last year.
Debt-to-GDP — an indicator of the ability to repay debt — approached 328 percent, a 1.5 percentage point increase, as government debt levels of $95 trillion clashed with slowing inflation and economic growth.
The IIF said it expects debt growth to slow this year, amid unprecedented global economic policy uncertainty and still-elevated borrowing costs.
It warned, though, that despite high borrowing costs and economic policy uncertainty, its forecast of a $5 trillion increase in government debt this year could rise due to calls for fiscal stimulus and larger military spending in Europe.
“I think we will likely see much more volatility in sovereign debt markets, especially in those countries where we see high political polarization,” said Emre Tiftik, the IIF’s director of sustainability research.
ROLLOVER CHALLENGE
Emerging markets, driven by China, India, Saudi Arabia and Turkiye, accounted for roughly 65 percent of global debt growth last year.
This borrowing, along with a record $8.2 trillion in debt which emerging markets need to roll over this year — 10 percent of it in foreign currency — could strain countries’ abilities to weather looming political and economic storms.
“Heightened trade tensions and the Trump administration’s decision to freeze US foreign aid, including cuts to USAID, could trigger significant liquidity challenges and curb the ability to roll over and access to FX debt,” the report said.
“This underscores the increasing importance of domestic revenue mobilization to build resilience against external shocks.”
Tiftik added that the high volatility underscored the need to increase multilateral development banks’ abilities to mobilize private capital.
Several developing economies, such as Kenya and Romania, have struggled to boost domestic revenue due to public anger over tax hikes and coming elections, respectively.


Oil Updates — crude edges up as US stockpile report counters rising supply concerns

Oil Updates — crude edges up as US stockpile report counters rising supply concerns
Updated 26 February 2025
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Oil Updates — crude edges up as US stockpile report counters rising supply concerns

Oil Updates — crude edges up as US stockpile report counters rising supply concerns

SINGAPORE: Oil prices rose marginally on Wednesday, bouncing off two-month lows hit in the prior session after an industry group reported US crude stockpiles fell last week.

Brent crude rose 20 cents, or 0.3 percent, to $73.22 a barrel by 7:30 a.m. Saudi time. US West Texas Intermediate crude oil futures were up 18 cents, or 0.3 percent, to $69.11.

US crude stocks fell 640,000 barrels in the week ended Feb. 21, market sources said on Tuesday, citing American Petroleum Institute data. Official US stockpile data is due later on Wednesday.

“If confirmed by the EIA later today, it would mark the first decline in US crude oil inventories since mid-January,” said ING commodities strategists in a note on Wednesday.

Analysts polled by Reuters estimated a 2.6-million-barrel increase in US crude stocks last week.

On the supply side, prospects for a peace deal between Russian and Ukraine are improving, said ING, while the market also eyed the potential implications of a minerals deal between the US and Ukraine.

“This would take us a step closer to Russian sanctions being lifted, removing much of the supply uncertainty hanging over the market,” the ING strategists said.

The US and Ukraine agreed terms of a draft minerals deal central to Trump’s efforts to rapidly end the war, sources familiar with the matter told Reuters on Tuesday.

Meanwhile, dour economic reports from the US and Germany capped price gains, after pulling oil prices more than 2 percent lower on Tuesday. Brent crude closed at its lowest since Dec. 23, while WTI recorded its lowest settlement since Dec. 10.

US data showed consumer confidence in February deteriorated at its sharpest pace in 3-1/2 years, with 12-month inflation expectations surging. Meanwhile, the German economy shrank in the last three months of 2024 versus the prior quarter.

Oil prices have been buffeted by concerns that US President Donald Trump’s decisions about tariffs against China and other trading partners could add to pressure on the country’s economy.

That has eased worries about tighter near-term oil supply despite fresh US sanctions against Iran, ANZ Bank analysts wrote in a note to clients.

Even though US policy measures could drive an up to 1 million barrel-per-day reduction in Iranian crude exports, any loss in supply from the Middle Eastern nation is countered by OPEC+ members hoping to bring more supply to the market in the months ahead, Commodity Context analyst Rory Johnston said. 


Lucid CEO steps down, company expects to more than double vehicle production this year

Lucid CEO steps down, company expects to more than double vehicle production this year
Updated 26 February 2025
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Lucid CEO steps down, company expects to more than double vehicle production this year

Lucid CEO steps down, company expects to more than double vehicle production this year

BENGALURU: Electric vehicle maker Lucid Group said on Tuesday that Peter Rawlinson, its CEO for over 5 years, is stepping down from the role, and forecast its vehicle production will more than double this year, sending the company’s shares up 10 percent in extended trading.

Through his 12-year tenure as part of the top brass at Lucid, Rawlinson helped launch the company’s Air models and guided it through its public offering.

The company’s operating chief, Marc Winterhoff, will take the position of interim CEO.

Saudi Arabia’s Public Investment Fund is the majority shareholder in Lucid Group via Ayar Third Investment Co., and in October it invested an additional $1.5 billion into the EV producer.

“Now that we have successfully launched the Lucid Gravity, I have decided it is finally the right time for me to step aside from my roles at Lucid,” Rawlinson said.

The firm also forecast vehicle production this year to be around 20,000, compared with around 9,000 cars it made in 2024.

Andres Sheppard, senior equity analyst at Cantor Fitzgerald, said the CEO transition is “surprising” but not unexpected given the company’s previous underperformances, adding that the production forecast is “encouraging.”

The company hired veteran finance professional Taoufiq Boussaid as its chief financial officer last month. Boussaid previously helped reduce debt load for his former company.

As the EV demand in the US remains uncertain, Lucid has been trying to diversify its product lineup and step into the SUV market with the Gravity model, going toe-to-toe with Tesla’s model X and Rivian’s R1S vehicles.

The success of the Gravity SUV is seen as crucial to Lucid’s long-term outlook, as it burns through cash ramping up production while its Air sedans have seen price cuts due to slower demand.

“They (Lucid) still have an amazing product. Now it’s just a matter of can they turn the company around, can they increase demand and production with the Gravity, and really that’s going to bridge the gap to their mid-size vehicle in 2026,” Sheppard said.

The company continues to lose tens of thousands of dollars per vehicle, while rivals such as Rivian move aggressively to cut costs in a bid to make profits.

Lucid reported revenue of $234.5 million, beating Wall Street expectations of $214.2 million, according to data compiled by LSEG.

It posted a loss of $397.2 million in the quarter ended Dec. 31, compared with a loss of $653.8 million a year ago.

Demand for pure battery cars in the US has been slow as people gravitate more toward cheaper hybrids owing to high interest rates and economic uncertainty.


Saudi Arabia raises $2.36bn in euro bonds, including inaugural green tranche 

Saudi Arabia raises $2.36bn in euro bonds, including inaugural green tranche 
Updated 26 February 2025
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Saudi Arabia raises $2.36bn in euro bonds, including inaugural green tranche 

Saudi Arabia raises $2.36bn in euro bonds, including inaugural green tranche 

RIYADH: Saudi Arabia has raised €2.25 billion ($2.36 billion) through a euro-denominated bond sale, including its first green tranche, as part of its Global Medium-Term Note Issuance Program. 

In a press statement, the Kingdom’s National Debt Management Center said the offering, split into two tranches, saw an oversubscription of four times the issuance size, attracting around €10 billion in orders. The green tranche, valued at €1.5 billion, carries a seven-year maturity, while the second tranche, worth €750 million, matures in 12 years. 

This marks the first time Saudi Arabia has issued a green euro bond, aligning with its broader sustainability strategy under the Financial Sector Development Program. The issuance is a step toward the Kingdom’s goal of achieving net-zero emissions and reflects its commitment to sustainable financing, NDMC said. 

“It also highlights the Kingdom’s efforts to investors and market participants, representing a significant step toward realizing the objectives of Saudi Vision 2030,” it added.   

Earlier this month, Muhannad Mufti, NDMC’s chief of portfolio management, said at the Capital Markets Forum that Saudi Arabia is considering issuing green bonds in international markets in 2025. 

The Kingdom’s debt market has grown significantly in recent years, drawing investor interest in debt instruments amid rising interest rates. 

In December, a report by Kamco Invest projected that Saudi Arabia would account for the largest share of bond and sukuk maturities in the Gulf Cooperation Council region, reaching $168 billion between 2025 and 2029. Of this, government-issued bonds and sukuk are expected to total $110.2 billion. 

Another report by Fitch Ratings noted that the GCC’s debt capital market surpassed the $1 trillion outstanding mark by the end of November 2024. 

Meanwhile, NDMC completed its February issuance of riyal-denominated sukuk at SR3.07 billion ($818 million). The Kingdom raised SR3.72 billion in sukuk in January, SR11.59 billion in December, and SR3.41 billion in November.