Buy Now, Pay Later: MAGNiTT interviews Tabby Co-Founder and CEO, Hosam Arab

Tabby, the UAE-based FinTech startup and the region’s first Buy Now Pay Later solution, recently announced they raised $7M in a funding round led by Raed Ventures with participation from MSA Capital and existing investors Arbor Ventures.

Following on from this announcement, MAGNiTT took the opportunity to catch up with Co-Founder and CEO of Tabby, Hosam Arab to discover more about this evolving startup, his thoughts on the impact of COVID-19 on long-term shopping behaviour, why people should be encouraged to pay in installments, moving away from Cash on Delivery, and much more.


Q1. To start, tell us briefly about Tabby. How does it work?

Tabby provides shoppers with an instant flexible payment solution for their purchases either through a one-time deferred payment or in monthly zero-interest installments.

Tabby integrates directly into the online checkout on our partner websites where customers can select one of our payment options, Pay Later and Pay in Installments. The customer can quickly complete their checkout, receive their order, and repay Tabby when their payments are due. Retailers get paid immediately by us.

Q2. Why do you think people in this day and age should be encouraged to pay in installments for everyday purchases?

We encourage responsible spending. Installments have always been around. The difference is that most existing installment solutions offered by the banks place an added cost on customers in the form of interest and hidden fees. Our goal is to help customers spread the cost of their purchases without overburdening them. The customer benefits because they get to buy what they want, and the merchant benefits because they are able to make a sale that they otherwise may not have.

Q3. Do you think Buy Now, Pay Later (BNPL) can help retailers drive consumer demand in this difficult period?

BNPL will be especially helpful for retailers to drive demand in times like this. Consumer spending is expected to be extremely weak in the current environment and retailers will need tools to help them drive sales. Historically, they could either discount heavily, thereby impacting their margins and diluting their brand, or spend inefficiently on marketing to drive demand that really isn’t there. With BNPL, retailers are essentially making spending more comfortable for their customers, and it’s not nearly as expensive for the retailer as marketing or discounting.

Q4. It is quite extraordinary that you managed to raise this round with the current COVID-19 crisis. Was this round in the works from much earlier? How did COVID-19 affect your fundraising efforts?

We weren’t planning on raising at this time but given the uncertainty in the funding environment, we felt it was important to ensure we were sufficiently capitalized to fund our growth and the growth of our partners. We are very lucky to be working with investors that see the long term value of what we are building and given the early traction we were able to achieve, they were comfortable to move quickly.

Q5. It’s safe to assume that after this round, you're going to have some exciting growth plans. Can you share some of Tabby’s short-term plans for expansion with us? 

The current situation has accelerated our expansion to new markets as the importance of a solution that addresses slowing consumer demand became even more apparent. As you know, Tabby launched with our first partner merchants in the UAE in February. We have now also launched in KSA which is by far the biggest e-commerce market in the region. We have a number of exciting products in plan that we will be announcing as they become ready. 

Q6. How have you tried to overcome any user behavior challenges Tabby may have faced? Has the current climate affected Tabby’s usage in any way?

The Buy Now Pay Later concept is still new to the region and naturally, many customers will need time to get familiar with it. We’re working very closely with our partners to ensure there is sufficient communication on their sites while we run awareness campaigns to communicate the value of BNPL to consumers.

We’re actually seeing higher uptake with Tabby on some of our earlier merchants in the past couple of months which can partly be attributed to the current climate.

Q7. Do you have any plans to help the region move away from Cash on Delivery towards online payments? And why do you think COD is still so popular within MENA?

Of course! Tabby’s Pay Later solution offers an alternative to COD by allowing customers to purchase products online using only their mobile phone number and email address and requires no pre-registration or credit card to use. Customers checkout from a partner site, receive their orders and then pay for them 14 days later. This ensures that customers can now receive their products and pay for them later. Our partnership with DHL will help bring this solution to more e-commerce retailers in the region and beyond.

COD has historically been popular because customers didn’t have enough confidence in the level of service they were getting, so what they did is pushed the risk onto the online retailer. By giving the customer the assurance that they can pay for an order only after receiving it, we hope to overcome these concerns.

Q8. Do you think COVID-19 will change shopping behavior in the long term within the region? And what changes do you hope will remain/want to see?

COVID-19 has accelerated the adoption of online shopping by consumers and with the slowdown offline, the shift of retailers online. We don’t see that trend slowing down after COVID goes away. Many customers will have tried to shop online for the first time ever during this time, and for the most part, will have appreciated the convenience and value online shopping offers. This will create stickiness that is unlikely to dissipate.

Moreover, we believe that the long-awaited move away from COD will accelerate post-COVID and this is a trend that we want to ensure we remain on top of by offering solutions that address the concerns that forced customers to choose COD in the past.

Q9. How important is funding to Tabby and what were you looking for from your investors, beyond capital?

Funding is very important for any BNPL business and more so an early-stage business like ours. The BNPL model requires us to pay our merchant partners before we get paid by our customers. In other words, our merchant partners essentially take a risk on us and we need to ensure that we give them the comfort and assurance that cashflow and timely payments are not things that they need to be concerned with. Working with an underfunded BNPL player carries a significant risk for any merchant.

We were looking for investors that understood the region, understood retail, or understood payments. We were fortunate to find investors that possessed all three.

Q10. What do you foresee as the largest challenges to scaling Tabby in MENA / beyond?

Two things: Funding and risk.


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The Lebanese startup ecosystem saw an increase of 18% in startup deals between 2018 and 2019, with 45 deals taking place. While the number of investments has gone up, the majority of these involve Early-Stage companies. Discover more details in our 2019 Lebanon Venture Investment Report.