As COVID-19 restrictions across the globe kept people at home, online consumer spending exploded—as did a need for new payment models. Over the last two years, adoption of Buy Now, Pay Later (BNPL) services, such as Riyadh-based Tamara, has swelled in earnest.
Launched in September 2020 by serial entrepreneur Abdulmajeed Alsukhan and partners, Tamara’s BNPL solution allows consumers to pay for products in installments, without incurring any interest charges. The company’s revenues come from fees paid by merchants partnered with Tamara, offering their customers an innovative and intuitive way to buy big-ticket items, both online and in-store.
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The app’s early in-market success spurred a $110 million investment in a record-breaking Series A round led by digital payments giant Checkout.com. This followed $6 million of funding in the largest seed round in Saudi Arabia’s history—just four months into its founding.
Alsukhan says that the pandemic is not the only reason for Tamara’s rapid growth rate and its appeal to global investors. Authorities are also giving local startups support to roll out innovative services to Saudi Arabia’s young, aspirational, and tech-savvy population.
In Tamara’s case, the company was the first BNPL firm to be enrolled in the Saudi Central Bank’s sandbox program, where fintechs are given free rein to turn ideas into licensed businesses.
“The government knows that you can’t expect major innovations from incumbent companies, so it is empowering tech startups like Tamara,” Alsukhan says.
Flush with cash and buoyed by supportive regulations, Tamara is now expanding rapidly across the entire Gulf region.
“The market is incredibly receptive, but BNPL is still a nascent phenomenon,” Alsukhan says. “There is huge room for growth.”
What is the secret to Tamara’s success?
We help people budget for their purchases. Sometimes people have events coming up or products they want to buy that require a bigger budget. They can use Tamara to split that cost into smaller payments. We are a trustworthy financial partner for our customers.
We are not a credit card company. We don't make money if customers are late—in fact, we lose money. The way we make money is to integrate with merchants so that we are one of the options at checkout. When you buy an item from one of our merchant partners, you see Tamara alongside Visa and Mastercard.
Why do you think Saudis have adopted BNPL so enthusiastically?
Banks and other service providers used to take their customers for granted. Service quality was low, without innovation or new products that matched daily needs.
Now the country is at an inflection point. Saudi Arabia and the Gulf region in general has one of the highest rates of penetration and growth in BNPL. Traditional financial service providers like banks are not loved by their customers. But new fintech brands are building a people-first culture from the beginning. Tamara is at the forefront of this trend. We are determined to make that change in the financial industry.
How does BNPL empower merchants?
Tamara enables consumers to purchase a higher ticket value. The ticket size of an item bought using Tamara is 80% higher than any other payment method. We also allow people to buy more of their favorite brands. Our merchants are seeing an increase in completed online sales and a huge increase in their top lines.
How is the startup culture in Saudi Arabia developing?
Five years ago, no one in Saudi Arabia really knew what a startup was. Now we are seeing multiple venture capital funds across the region. The change that has happened here has been tremendous. There is a new wave of startups in the country. There is no better time than now to start something.
This is one of the missions of Tamara. We want to show people in the region that they, too, can develop successful, innovative businesses. Stories like ours will inspire them.
What do you like most about being an entrepreneur?
I left my job at the Central Bank after just six months to launch a startup. Everybody thought I was crazy. But I just had a desire to help bring about positive change. I like waking up every day to face challenges. There is always something challenging and inspiring on the agenda. We still have a lot to do at Tamara, but the decision I took is now paying off. It's a nice feeling.
This story was produced by The Buzz Business.
