Mashreq, the Dubai lender controlled by the Al Ghurair family, has invested $10 million in UAE-based FinTech start-up Cashew, becoming the latest to tap into a rapidly expanding ‘buy now, pay later’ (BNPL) sector.
Founded in 2020, Cashew offers its services in the UAE and Saudi Arabia — the Arab world’s largest economies — through an app and a web-based platform.
As part of the investment, Cashew’s payment platform will be integrated as an option on the acquiring network of Neopay, the payments subsidiary of Mashreq. The lender will also support the start-up to launch in Egypt — the Arab world’s most populous economy — in the last quarter of this year.
In March, Mashreq carved out its payments arm into its new division Neopay, in an effort to help businesses handle credit and debit card payments amid a pandemic-fuelled e-commerce boom.
“Our partnership with Cashew will lead the way for the future of financial services in the region,” Mashreq’s group chief executive Ahmed Abdelaal said.
“We will leverage the full network of Mashreq merchants and consumers to provide our ecosystem with the most ubiquitous and flexible BNPL options in the market,” Mr Abdelaal said.
Mashreq’s investment is part of a larger funding round that involves other investors as well, Cashew said, without disclosing further details. Since its inception, the FinTech start-up has raised nearly $10m.
BNPL platforms allow consumers to make purchases without paying the full amount upfront, avoiding the use of credit cards and hefty interest charges. Merchants are still protected through credit risk checks, late fees and blocks on customers who have defaulted.
Consumers can choose to split payments into installments or simply delay them by weeks to months without any hidden fees, while merchants are paid in full upfront.
The BNPL concept is gaining in popularity across the world and has been disrupting the payments industry, buoyed by consumers’ fragile personal finances amid the pandemic-induced economic headwinds.
By 2025, the industry is expected to grow 10 to 15 times its current volume, topping $1 trillion in annual gross merchandise volume by some estimates, according to a report by New York data research consultancy CB Insights.
Nearly $4 billion was invested in BNPL companies last year — up from $1.7bn in 2020, according to Crunchbase.
In the Middle East, platforms such as Dubai-based BNPL start-up Tabby raised $50m last year while Saudi Arabia’s Tamara raised a record $110m in a Series A round.
In September, Abu Dhabi Islamic Bank, the emirate’s biggest Sharia-compliant lender, partnered with Dubai-based digital payments provider Spotii to launch a virtual BNPL prepaid card in the UAE.
