Tabby, the Dubai-based company that allows people to make online purchases instantly and pay for them later, raised $23 million 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 and help it "materially scale its product and engineering capabilities", it said in a statement on Tuesday.
“The shift to online retail has never been more evident," Hosam Arab, the company's co-founder and chief executive, said. "Consumers are becoming ever more demanding as they actively seek convenience and reliability in their shopping experience. And this includes how they pay for their purchases."
Founded last year, Tabby has agreements in place with a number of big retail groups including Ikea, Toys R Us, Ace Hardware and other brands operated by Al Futtaim Group and Landmark Group. It allows shoppers to defer payment on purchases made either online or in-store for 30 days or to pay in four monthly instalments at no extra cost.
The company says integration of its service can help increase sales conversion rates for retailers by over 20 per cent and boost transaction sizes by 30 to 85 per cent. Tabby has already agreed a partnership with Visa and joined a regulatory sandbox run by Saudi Arabia's central bank.
The initial Series A funding round also secured backing from STV, Raed Ventures, Global Founders Capital, Jimco, Global Ventures, Venture Souq, Outliers VC, MSA Capital, HOF and Jordan's Arab Bank.
Tabby is "the leader in buy now, pay later" in the Middle East and North Africa region, said Melissa Guzy, managing partner at Arbor Ventures. The region itself is "at a tipping point" in terms of the growth of digital payments, she added.
"Buy now, pay later solutions are booming globally thanks to accelerated payments digitisation and e-commerce penetration, and the Middle East is no exception. Tabby’s solution fits squarely within our thesis that FinTech solutions will drive better experiences for merchants and consumers," said Ibrahim Ajami, head of ventures at Mubadala.
Investor interest in buy now, pay later firms is also booming. Europe's biggest player, Sweden's Klarna, raised $650m in a funding round led by US venture capitalist Silver Lake and Singaporean sovereign wealth fund GIC in September. In the same month, US-based operator Affirm founded by Max Levchin raised $500m in a late stage funding round backed by Durable Capital Partners.
Mr Levchin had sold a previous company to PayPal, which has itself launched a 'Pay in 4' service allowing customers to spread payments over a four-month period.