RIYADH: Saudi buy now, pay later provider Tabby has secured consumer finance and small and medium-sized enterprise finance licenses from the Kingdom’s central bank, enabling it to offer longer-term loans for higher-value purchases and working capital to businesses.
The licenses are expected to move Tabby beyond short-term BNPL and support its ambition to become a broader financial services provider, according to Abdulaziz Saja, general manager of Tabby Saudi Arabia.
The move comes as Saudi fintech companies increasingly seek to expand beyond niche financial products into broader digital banking services. Under Vision 2030, regulators have encouraged innovation through new licensing frameworks aimed at increasing competition, improving financial inclusion and expanding access to credit for consumers and businesses.
Eligible customers can finance purchases of more than SR2,000 ($531.79), with limits of up to SR50,000 and repayment periods of as many as 12 months, while merchants on Tabby’s platform will be able to access business financing.
“Since Tabby started, we’ve always wanted to be a holistic financial institution or financial services provider to the customer,” Saja said, adding: “We always knew that the end goal was for Tabby to sort of feel like a banking app.”
The consumer finance license extends Tabby’s offering beyond the lower-value purchases typically associated with BNPL. Saja said the existing service, capped at SR5,000, largely addresses purchases such as clothing, footwear and lower-cost airline tickets, while customers have increasingly asked for higher limits and longer repayment periods.
“We’re trying to grow with our customer,” Saja said. “The customer that used Tabby maybe four years ago is in a different stage of his life today, and so his needs are different, or their needs are different, and we need to keep up with that.”
Abdulaziz Saja, general manager of Tabby Saudi Arabia. Supplied
Longer payment plans are already being introduced across retailers, including Noon, Fitness Time, and Almanea, as well as IKEA, Almosafer, Almatar and flynas.
The plans use a Shariah-compliant Murabaha structure under which the financing cost is disclosed and fixed at the start, with no compounding or late fees, according to the company.
The higher limits are expected to expand Tabby’s addressable market in sectors where its previous financing ceiling restricted transaction sizes, including education, travel, and healthcare, as well as used cars, furniture and short-term accommodation.
Saja said Tabby has previously financed relatively low-cost professional courses but was unable to cover larger expenses such as school and university tuition. The company also expects to finance higher-value travel purchases and healthcare procedures that require longer repayment periods.
“That’s a segment that we are absolutely going after, for sure,” Saja said of education. “We see a very big need for it. We see a way that we can ease the burden on parents to pay the full amount upfront.”
The SME finance license will allow Tabby to provide working capital to retailers on its platform, with a focus on smaller e-commerce companies that may fall below the minimum size typically served by commercial banks.
“A lot of them make less than a million riyals per year in revenue,” Saja said. “That’s a segment that is really not served by anyone.”
Tabby believes its existing relationship with merchants gives it access to data that can support more detailed credit assessments. The company can review a retailer’s trading history, store activity, product mix and record of refunds and returns, Saja said.
“We’re able to score you much better than a bank that’s completely removed from your business is ever able to score you,” he said.
Financing merchants could also support Tabby’s consumer business by helping retailers expand their operations and product ranges. “The growth of our best e-commerce means a growth in business volume for us and more products for our consumers,” Saja said.
The move into longer-term financing will expose Tabby to a different risk profile from short-duration BNPL. Extending repayment periods from a few months to as long as a year requires stronger underwriting, more accurate customer data and closer monitoring of borrowers over time, Saja said.
“The need to know our customer more is even more so today, because I am engaging not in, let’s say, a two-month relationship, potentially, but in a year and a half, and a lot can go wrong in a year and a half for any person,” he said.
Tabby plans to manage that risk by initially focusing on customers with a proven repayment history and gradually increasing their financing limits. The company has also piloted merchant-funded 12-month payment plans in Saudi Arabia and already offers longer-term financing in the UAE, giving it additional data on customer repayment behaviour.
“We’ll do it gradually over time as we raise the caps, increase the tenors, but we do have some experience in doing it,” Saja said.
The consumer finance product is expected to serve Tabby’s existing customer base more heavily than new users, although the higher limits may attract customers who previously had little need for lower-value BNPL services. Saja said the company could expect “around 10 percent new customers on top of an existing large customer base”.
Tabby serves more than 25 million registered users and over 65,000 businesses across the Gulf Cooperation Council, with Saudi Arabia representing its largest market, according to the company.
Saja did not provide a firm forecast for the new products, saying Tabby’s historical growth had frequently exceeded internal expectations. However, he said longer tenors and higher limits could materially increase the size of its financing book because one larger loan could be equivalent in value to several BNPL transactions.
He suggested the new products could potentially add “maybe 50 percent over what we do today”, while cautioning that the figure was not a formal target.
BNPL is likely to remain Tabby’s largest product by gross merchandise value because of its higher transaction frequency and faster portfolio turnover, Saja said.
Longer-term consumer financing may account for a smaller share of originations but could generate more revenue because customers pay a fixed financing cost.
“Revenue might actually beat the BNPL just because of that margin,” he said. “And I feel like that mix is good for the company, good for the investors, and potentially also good for the merchants and customers.”
Longer-duration financing will also carry higher expected credit losses and reduce portfolio liquidity compared with short-term BNPL, Saja said.
Tabby will therefore balance the higher revenue potential against the greater capital and risk-management requirements of holding loans for as long as 12 months.
The two licenses form part of Tabby’s broader strategy to combine payments, financing and other financial products within one platform.
The company previously acquired digital wallet provider Tweeq and is working with the Saudi Central Bank to integrate wallet capabilities into the main Tabby app.
Saja said the company could eventually add savings and investment products through partnerships with brokerages and investment providers, extending Tabby’s role beyond consumer spending.
“If we’re asking you to spend, maybe it’s only right to ask you to save something for the future,” he said.
