A New opportunity for a classic idea.
With all the fintech innovation that is developing throughout the Middle East, it is a little strange to see the concept of Buy Now Pay Later (BNPL) being used as the basis of new start-ups. In UK, these systems are very prevalent, with one of our leading retailers, the Very Group, using it as one of their flagpole features for their sales for their websites.
BNPL is, on the face of it, a simple enough concept. You buy a product, then, usually interest free, you can pay for it as set period later. Those periods can range anywhere from two weeks to twelve months, with customers having the option to pay off lump sums or to make monthly installments. All of this gives both customer and retailer new opportunities; customers are buying things they would normally leave aside, because they can delay the payments or pay more affordable installments and retailers are gaining the access to those customers that they previously lacked.
BNPL systems can work very well for both sides of the table as a method of shopping, and yet… a cursory search reveals a layer of controversy about these shopping methods that deserves a further look.
The Problem that arises with any credit-based system is that credit can sometimes make people feel less like Buy Now Pay Later, and more like Buy Now Pay Whenever. The initial rush of having access to products that they previously had, combined with the allure of seemingly paying less as installments can lead to you to running up debts.
One of the problems of the BNPL system is that it needs a lot of people and companies to use it in order to generate revenue for the company providing the service. Where start-ups such as Saudi-based Tamara.co and UAE-based Tabby.ai need to be careful is in avoiding the pitfalls that have befallen many of their international compatriots.
Though we believe and want both these start-ups will be successful, especially with the highly regarded leadership of both companies, it is up to the you as the customer to manage your purchases no matter how much both companies stress their Terms and Conditions.
Clarity is the keyword.
From my background in customer service, I found that the biggest problem that struck when BNPL got involved was that of clarity. Thankfully, as relative newcomers to the market, Tamara.co and Tabby.ai have the benefit of hindsight and the fact that others have already made all the major mistakes!
A look at their websites shows that both companies make their terms very clear, and let their customers see, up front, how their systems work to both parties’ benefit. However, they need to ensure they continue to be vigilant. Managing their customers’ expectations is key and ensuring that customers do not end up falling into the traps of debt is even more important, especially in the current economic climate. Tabby.io has taken strides lately with major partnerships with MasterCard and IKEA.
As new companies, both Tamara.co and Tabby.ai have the benefit of being clean slates, and they need to make that benefit work for their customers. For you as a customer – if you manage your purchases with the foresight that the euphoric feeling you had when you made the initial purchase will be gone while you may still be making the payment instalments, then we see BNPL as a way to enhance the customer experience and allow you to better manage your purchases. BNPL will continue to grow so we can enjoy more BNPL retail options but the responsibility ultimately falls upon you to make your payments.
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