The raise: UAE-based BNPL provider Tabby bagged $58 million in Series C funding at a $660 million valuation from investors including PayPal, according to a company statement.

The fintech has earmarked the funds to expand its consumer financial services product line and said the raise makes it one of the most valuable startups in the region.

Tabby defies bearish market: The BNPL firm has successfully completed multiple funding rounds despite a wider slowdown in investment. Global fintech funding dropped 46% year over year (YoY) in 2022, per CB Insights. But Tabby secured a $54 million Series B extension round in March and $150 million in debt financing in August.

A region ripe for BNPL uptake: Favorable BNPL conditions in the Middle East and North Africa contributed to Tabby’s success in securing financial backing.

1. Credit penetration is low. Just 8% of consumers in the region had access to a credit card in 2021, per PPRO. That suggests high demand for making payments on credit, helping drive BNPL use. It also means consumers won’t be stretched paying off multiple cards compared with shoppers in developed markets, which makes them less likely to miss BNPL repayments.
2. BNPL spend is high. The UAE ranks among the highest globally in terms of the share of consumers who have made one-off BNPL purchases, per YouGov.
3. There’s room to grow. While it only accounts for about 1% of total ecommerce spending in the region, BNPL is poised to increase that share. The strongest growth is projected in Saudi Arabia, where BNPL is forecast to represent 3.4% of ecommerce spend by 2025, per FIS. That should give Tabby an early mover advantage so it can build out a presence before the market matures.
4. More accommodating oversight. A generally supportive environment for BNPL firms in the region should help encourage innovation compared with more stringent watchdogs in developed nations. Countries like the UAE have introduced innovation hubs, while Egypt and Saudi Arabia have regulatory sandboxes.

The bottom line: BNPL looks set to grow in MENA as underserved consumers drive demand. Foreign players could explore establishing a presence in the region before the payment method picks up steam.

This article originally appeared in Insider Intelligence's Payments Innovation Briefing—a daily recap of top stories reshaping the payments industry. Subscribe to have more hard-hitting takeaways delivered to your inbox daily.

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