Tabby, a UAE FinTech start-up offering “buy now, pay later” services on e-commerce purchases, secured $7 million (Dh25.7m) to fund further growth and expand to Saudi Arabia, the company said on Monday.
The funding round was led by Saudi Arabia’s Raed Ventures, with China’s MSA Capital and existing investor Arbor Ventures also participating, and it comes after a $2m seed-funding round in November.
Tabby allows customers to purchase products online using only their mobile phone number and email address. They can check out without being required to enter their credit or debit card details and can choose to pay within 14 days or agree to interest-free instalments over three months.
If a customer misses a payment, however, a late fee of Dh15 or 15.35 Saudi riyals is charged 15 days after the order is delivered. The fees then double for every two weeks until the overdue payment is settled, but it is capped at the third late fee.
The investment comes as online shopping is booming due to the Covid-19 pandemic, keeping consumers largely at home, but business and personal finances are fragile.
“We are very pleased to bring our best-in-market solution to Saudi Arabia at a time when consumers and merchants alike will be strapped for cash,” said Hosam Arab, co-founder and chief executive of Tabby. “This funding will give our merchant partners further security and assurance that we are sufficiently capitalised to support their sales."
Online retailers have seen sales soar in recent months since business closures and lockdowns began. Dubai Chamber said this trend is set to become the "new normal" and the Dubai Future Foundation has urged brick-and-mortar retailers to adapt quickly to the shift towards e-commerce.
Mr Arab, previously co-founder and chief executive of online retail site Namshi, started Tabby in 2019 and the site went live in February.
The company’s seed round, led by Global Founders Capital with participation from Arbor Ventures and Wamda Capital among other investors, was used to develop its proprietary technology, grow its merchant network and hire talent.
“Hosam and his team have built an impressive product that structurally solves key friction points in a transaction for both consumers and merchants, which is especially relevant given the current pandemic,” said Saed Nashef, Raed Ventures’ founding partner.
The company has partnered with over 20 e-commerce retailers on its site, including Abdul Samad Al Qurashi in the beauty sector and Souqalmal.com for insurance.
It recently signed an agreement with Apparel Group, one of the largest retail groups in the Middle East, to offer its services across the group’s entire online portfolio, including brands such as Tommy Hilfiger and Aldo.
Tabby said in a statement on Monday that “a number of partnership announcements” will “follow soon”.