Mashreq invests $10m in UAE FinTech start-up Cashew

The company's payment platform will be integrated as an option on the Dubai lender's payments arm, allowing it to offer buy now pay later options

In March, Mashreq carved out its payments arm into a new division called Neopay. Satish Kumar / The National

Mashreq, the Dubai lender controlled by the Al Ghurair family, has invested $10 million in UAE-based FinTech start-up Cashew, becoming the latest to tap into a rapidly expanding ‘buy now, pay later’ (BNPL) sector.

Founded in 2020, Cashew offers its services in the UAE and Saudi Arabia — the Arab world’s largest economies — through an app and a web-based platform.

As part of the investment, Cashew’s payment platform will be integrated as an option on the acquiring network of Neopay, the payments subsidiary of Mashreq. The lender will also support the start-up to launch in Egypt — the Arab world’s most populous economy — in the last quarter of this year.

In March, Mashreq carved out its payments arm into its new division Neopay, in an effort to help businesses handle credit and debit card payments amid a pandemic-fuelled e-commerce boom.

“Our partnership with Cashew will lead the way for the future of financial services in the region,” Mashreq’s group chief executive Ahmed Abdelaal said.

“We will leverage the full network of Mashreq merchants and consumers to provide our ecosystem with the most ubiquitous and flexible BNPL options in the market,” Mr Abdelaal said.

Cashew co-founder and chief executive Ammar Afif. Photo: Cashew

Mashreq's investment is part of a larger funding round that involves other investors as well, Cashew said, without disclosing further details. Since its inception, the FinTech start-up has raised nearly $10m.

BNPL platforms allow consumers to make purchases without paying the full amount upfront, avoiding the use of credit cards and hefty interest charges. Merchants are still protected through credit risk checks, late fees and blocks on customers who have defaulted.

Consumers can choose to split payments into instalments or simply delay them by weeks to months without any hidden fees, while merchants are paid in full upfront.

The BNPL concept is gaining in popularity across the world and has been disrupting the payments industry, buoyed by consumers' fragile personal finances amid the pandemic-induced economic headwinds.

By 2025, the industry is expected to grow 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.

Nearly $4 billion was invested in BNPL companies last year — up from $1.7bn in 2020, according to Crunchbase.

In the Middle East, platforms such as Dubai-based BNPL start-up Tabby raised $50m last year while Saudi Arabia's Tamara raised a record $110m in a Series A round.

In September, Abu Dhabi Islamic Bank, the emirate’s biggest Sharia-compliant lender, partnered with Dubai-based digital payments provider Spotii to launch a virtual BNPL prepaid card in the UAE.

“Mashreq is one of the most respected banking brands in the region, so they will bring our customers many benefits as we continue to grow our service offerings … this partnership will give consumers the largest merchant network to shop at, larger ticket size and the ability to pay over longer terms,” said Cashew co-founder and chief executive Ammar Afif.

“We can only accomplish these goals for our customers by partnering with respected financial institutions like Mashreq that understand and want to be a part of the growing BNPL segment,” he added.

Under the partnership, Cashew and Mashreq will offer new products to the market including longer tenure and higher ticket size BNPL options for consumers, the companies said in a joint statement.

They also plan to introduce point-of-sales lending options in the region later this year. It will allow consumers to opt for BNPL but with larger tenures such as six or 12 months.

By 2025, the BNPL is expected to grow 10 to 15 times its current volume, topping $1 trillion in annual gross merchandise volume by some estimates. Getty

The UAE's BNPL volumes are expected to jump 71 per cent on an annual basis this year, Mashreq’s senior executive vice president and group head of retail banking Fernando Morillo said.

“This is yet another prime example of the partnerships we can forge with innovative FinTech operators, who share our mission to deliver a safe and seamless payment experience for our customers.

“We eagerly await the roll-out of further services as we continue to empower our customers with more choice and convenience in the UAE and in the future, across Egypt,” said Mr Morillo.

Established in 1967, Mashreq, like its peers in the Middle East, is pivoting towards digital banking and is reducing the number of physical branches to cater to a young, tech-savvy demographic that typically opts to complete its transactions online.