Commercial Bank of Dubai (CBD) approved a debt financing deal with Dubai-based buy-now-pay-later company Postpay, underscoring how FinTech and traditional banks are expanding the financial products offered in the market.
The strategic partnership with CBD will provide support to Postpay on several fronts including transaction banking, debt funding and e-commerce services, allowing it to focus on growth and support to its customers and merchant partners, Postpay said in a statement on Monday.
The deal with CBD will also help Postpay proceed with planned expansion in the UAE, Saudi Arabia and other GCC countries.
“This facility provides the necessary fuel to our engine and empowers us to achieve our ambitious goals for the future,” said Tariq Sheikh, founder and chief executive of Postpay.
The deal is CBD's latest step in its FinTech partnerships, which recently culminated in the lender establishing a permanent presence in the DIFC Innovation Hub, the largest FinTech ecosystem in the region.
“The partnership with Postpay is in line with our commitment to back our customers’ ambitions,” said Bernd van Linder, chief executive of CBD. “We believe in supporting the growing FinTech ecosystem in the UAE so as to enhance the overall payments sector with innovative digital solutions like [buy now, pay later].”
Last year, Postpay closed a $10 million pre-series A funding round, led by Afterpay, Touch ventures and others, which accelerated the growth of the company.
The buy-now-pay-later business model, which allows consumers to make online purchases instantly and spread their payments out over interest-free instalments, has boomed since the onset of the Covid-19 pandemic as consumers switched to shopping online.
The industry is expected to grow 10 to 15 times by 2025 worldwide, topping $1 trillion in annual gross merchandise volume by some estimates, a report by New York data research consultancy CB Insights said.
Postpay works with global brands, including H&M, Footlocker and Dermalogica as well as regional names such as Alshaya Group, The Entertainer and Kcal.
The company was founded in 2019 in Dubai and offers shoppers the option to pay in three monthly instalments at their partner stores with no interest or fees.