The outlook for Buy Now, Pay Later (BNPL) in the UAE is nothing short of transformative. What began as a niche payment option has rapidly evolved into a mainstream financial tool, reshaping how consumers shop and businesses sell. At the heart of this surge lies the UAE's advanced digital infrastructure and a population that is both young and tech-savvy.

Mobile connectivity is near-universal among younger demographics, and smartphone adoption is projected to reach 90 per cent by 2030. This digital foundation is complemented by a booming e-commerce sector: the regional online retail industry is expected to grow 18.3 per cent in 2025, with nearly half of purchases completed via mobile devices. Add to this the fact that 53 per cent of online shoppers in the UAE now use mobile wallets, and the conditions for fintech innovation - particularly BNPL - could not be more favorable.

Why BNPL Resonates in the UAE

BNPL's appeal in the UAE goes beyond convenience; it speaks to affordability and financial control. According to Tabby's Ultimate Middle East Shopping Survey, 59 per cent of users rely on BNPL to manage household budgets and ease cash flow, while 24 per cent cite interest-free terms as a key motivator. For many, BNPL is not just a payment method - it's a financial planning tool.

Walid Hassouna, CEO and Co-Founder of Valu, underscores this point:“BNPL's appeal is strongest among upwardly mobile groups seeking smarter ways to manage spending.” These consumers, often in the 26–35 age bracket, represent a significant share of the UAE's middle-income population.

Cultural and regulatory alignment

BNPL providers have tailored their offerings to align with local values and regulations. In the UAE, Tabby and Tamara introduced Sharia-compliant, no-interest models, eliminating late fees to build trust and resonate with cultural norms.“Our approach is deeply customer-centric, focusing on fair, transparent, and compliant payment experiences,” says Yamen Fakhreddine, Vice President and General Manager at Tamara.

Regulators have also stepped in to ensure stability. The Central Bank of the UAE brought BNPL under its consumer credit framework in 2024, mandating capital requirements and credit checks for high-value transactions. This move reinforced BNPL's legitimacy and strengthened consumer protection.

Impact on businesses

For UAE retailers, BNPL has become a baseline expectation rather than a differentiator. Tamara reports a 15 per cent uplift in online conversion rates, while Tabby sees a 33 per cent increase. Average basket sizes have surged by 30–50 per cent, as flexible payments encourage customers to spend more confidently.

Pan Home, a leading furniture retailer, illustrates this trend:“The integration of flexible payment solutions has become a game-changer for our industry. Thirty percent of orders now use BNPL transactions, enabling customers to order higher-value products in a more affordable and flexible way,” says Asif Uddin Mohammed, Head of E-commerce at Pan Home.

Beyond retail

BNPL is no longer confined to fashion and electronics. It is expanding into education, travel, and insurance - sectors traditionally associated with high-ticket spending. Classera Pay, for instance, introduced installment plans for school fees, resulting in a 42 per cent increase in adoption and a 28 per cent drop in late payments. In travel, Cleartrip maintains 10 per cent BNPL adoption in UAE bookings, making luxury holidays and long stays more accessible. Insurance providers like GIG Gulf report 42 per cent growth in installment-based premium payments, driven by rising demand for comprehensive coverage.

“We're seeing expectations for flexible, installment-based payments extend well beyond retail, into areas like travel, healthcare, and even education,” notes Tamara's Fakhreddine.“It's a clear sign that the sector is maturing.”

The role of AI and the road ahead

Artificial Intelligence is accelerating BNPL's evolution. Providers are using AI to personalize offers, predict repayment behavior, and combat fraud. Tabby employs behavioral data to adjust credit limits dynamically, while Valu leverages AI-driven underwriting to approve loans in under 10 minutes. Fraud rates have dropped significantly - from 1.5 per cent with credit cards to 0.6 per cent with BNPL, according to industry data.

“AI helps us understand when to show flexible payment options and how to communicate them in a way that feels relevant, not intrusive,” says Fakhreddine. This personalization is key to driving repeat use and loyalty, especially among Gen Z and Millennials, who increasingly expect seamless, mobile-first experiences.

A digital-first future

BNPL in the UAE is poised to become more than a payment method - it's evolving into a financial lifestyle ecosystem. Providers are building super apps that combine shopping, credit tracking, and even travel services. As Zain Khan of Tabby puts it:“We want to make BNPL accessible everywhere our customers shop, whether online or in-store.”

With strong regulatory oversight, rapid technological innovation, and a consumer base hungry for flexibility, the UAE is setting the benchmark for BNPL maturity in MENA. In this digital-first economy, affordability is no longer an afterthought - it's embedded in every transaction.

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