Dubai-based buy now, pay later company Tabby has introduced a new loyalty programme that rewards customers with physical cash that they can either use to fund new purchases, settle future payments or transfer to their bank accounts.
Customers can earn up to 20 per cent cashback after purchasing items from the platform’s retail partners, Tabby’s co-founder and chief executive Hosam Arab said.
"We have seen various forms of loyalty programmes created by other BNPL players globally, but this would be the first form of tangible cash for customers," Mr Arab told The National.
The buy now, pay later business model, which allows consumers to make online purchases instantly and spread the payments out over interest-free instalments, has boomed since the outbreak of Covid-19 as consumers stuck at home switched to shopping online.
According to a November 2020 survey by Checkout.com, about half of all consumers in the UAE said they expect to shop online more often while 60 per cent of respondents said they preferred digital payment channels rather than cash on delivery.
By 2025, the global buy now, pay later industry is expected to grow to 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.
“This growth trajectory has incumbents paying close attention and increasing their efforts to improve the digital user experience,” the report said.
“This growth trajectory has incumbents paying close attention and increasing their efforts to improve the digital user experience,” the report said.
The Tabby Cashback programme, which will partly be funded by the platform’s retail partners, is the next step in the company’s efforts to improve the shopping experience for consumers, said Mr Arab.
“Loyalty and repeat purchases are essential for a business like ours,” he said.
“If you are able to get customers to stick with and engage with you, it is a lot more cost-effective than acquiring new customers, which is the most expensive part of running an e-commerce operation.”
Global buy now, pay later players such as Sweden’s Klarna, US-based Affirm and Australia’s Afterpay and Zip have introduced their own loyalty programmes but none offer customers physical cash as a reward, he said.
In the Middle East, Dubai-based buy now, pay later platform Spotii, which was bought out by Zip for $16.25 million last month, offers an Advantage Plus programme that gives members access to participating gyms, beaches and leisure clubs.
“The real value here, compared to typical loyalty programmes where points are very hard to distinguish and put value on, is that this is real cash,” Mr Arab said.
“And for customers, that makes a difference as opposed to points that are very intangible. I think this is a game-changer [and] a great way to ensure that customers are loyal to Tabby.”
In December, Tabby raised $23m in initial venture capital funding led by Arbor Ventures and Mubadala Capital. The money will be used to fund the company's next stage of growth, Tabby said at the time.
Those plans remain on track and Tabby will be setting up shop in Kuwait and Bahrain in the next few months. It has also expanded its retail focus to offer educational courses and car insurance, said Mr Arab.
“Right now, we are looking at other forms of insurance and we are offering short-term English language courses and digital marketing courses with one of our partners," he said.
“We are setting up right now in Kuwait and Bahrain, and looking at adding a few more markets. We are testing both of those markets now but we will do more of an official launch in the next few months.”
Set up in 2019, the Tabby platform went live in February 2020 and has agreements with more than 2,000 large and small retailers including Ikea, Marks & Spencer, Home Centre and Toys R Us.
