Tabby, the Saudi buy now, pay later provider, has obtained consumer finance and small and medium-sized enterprise finance licenses from the Saudi Central Bank. These licenses allow Tabby to offer longer-term loans for higher-value purchases and provide working capital to businesses, moving beyond its traditional BNPL model.
New Licensing Details
The consumer finance license enables eligible customers to finance purchases over SR2,000 ($531.79), with limits up to SR50,000 and repayment periods of up to 12 months. Previously, Tabby’s BNPL service was capped at SR5,000 for short-term purchases. The SME finance license allows Tabby to provide working capital to retailers on its platform, focusing on smaller e-commerce companies that often fall below the minimum size served by commercial banks.
According to Abdulaziz Saja, general manager of Tabby Saudi Arabia, the licenses are expected to move Tabby beyond short-term BNPL and support its ambition to become a broader financial services provider. “Since Tabby started, we’ve always wanted to be a holistic financial institution or financial services provider to the customer,” Saja said. “We always knew that the end goal was for Tabby to sort of feel like a banking app.”
Expanding Addressable Market
The higher limits are expected to expand Tabby’s addressable market in sectors where its previous financing ceiling restricted transaction sizes, including education, travel, healthcare, used cars, furniture, and short-term accommodation. Saja noted that Tabby previously financed relatively low-cost professional courses but could not cover larger expenses such as school and university tuition. “That’s a segment that we are absolutely going after, for sure,” he 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.”
Longer payment plans are already being introduced across retailers, including Noon, Fitness Time, Almanea, 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.
SME Financing and Risk Management
The SME finance license will allow Tabby to provide working capital to retailers, with a focus on smaller e-commerce companies. “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, including trading history, store activity, product mix, and refund records. “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 added.
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. “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,” Saja said. Tabby plans to manage 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.
Customer Base and Revenue Impact
The consumer finance product is expected to serve Tabby’s existing customer base more heavily than new users, although the higher limits may attract new customers. 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.
Saja did not provide a firm forecast for the new products but suggested they could potentially add “maybe 50 percent over what we do today,” while cautioning that the figure was not a formal target. He noted that BNPL is likely to remain Tabby’s largest product by gross merchandise value due to higher transaction frequency, but longer-term consumer financing may 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.”
Broader Strategy
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. “If we’re asking you to spend, maybe it’s only right to ask you to save something for the future,” he said.
