By Gavin Gibbon
Fintech start-ups flourishing during Covid-19 pandemic as alternative options for businesses and consumers in increasingly digital world
As the economic crisis caused by the global coronavirus pandemic continues to bite, fintech companies are eyeing up opportunities in the market, encouraging cost conscious consumers with a variety of increasingly popular payment platforms.
According to data from Buy Shares, fintech leaders across the world raised a total of $3.81 billion in the second quarter of this year.
At a regional level, the UAE-based fintech start-up Tabby raised $7 million to fund its growth and launch its offering in Saudi Arabia.
Launched in 2019 with an initial $2 million in seed funding, Tabby’s mission is to empower consumers to easily buy what they want, when they want, while remaining in control of their finances.
Tabby’s Pay Later option offers an alternative to cash on delivery (COD) by allowing customers to purchase products online using only their mobile phone number and email address and requires no pre-registration or credit card to use. While Tabby’s Pay in Instalments option gives customers the flexibility to pay for their purchases in multiple, interest-free instalments without requiring a credit card.
Founder, Hosam Arab, told Arabian Business, the platforms were already gaining popularity ahead of the onset of Covid-19, but the various lockdown and movement restrictions enforced across the region has expedited its attraction.
He said: “We have witnessed a rapid shift to digital as we see more retailers rush to set up or expand their digital presence and customers starting to do more of their shopping online due to the convenience online retail offers and the risks associated with shopping in an offline environment.
“Moreover, given the slowdown in consumer spending, a solution like Tabby’s becomes ever more important for merchants who are looking for ways to boost their sales and customers who are looking to stretch their dollar.”
Postpay, a UAE-based buy now, pay later player, currently going through its pre-series A round, has been offering customers the choice to pay in instalments bi-weekly or monthly. Founder Tariq Sheikh has been leading the team together with experienced buy now pay later CTO Dani Molina.
Sheikh said: “We are providing customers with totally interest and fees free instalments which allow customers to manage their costs – as with global players we are starting to notice strong trends of customers using postpay as a budgeting tool.
“For retailers, we have a full suite of payment options and for many retailers we are a single solution for all their payment requirements. This enables us to provide far deeper insight to retailers and enrich their customer experience even further.”
Contactless payments such as mobile wallet transactions increased in hypermarkets across the region by 78 percent in Q1 2020 when compared with the same period a year ago, according to recent industry reports.
While a recent survey conducted by Ernst & Young found that 92 percent of the consumers in the UAE and Saudi Arabia have changed their shopping habits - including shifting to online purchases.
Anuscha Iqbal, CEO, Spotii, a payments platform for fashion, beauty and lifestyle that empowers customers to Shop Now and Pay Later with no interest, no cost and no catch, told Arabian Business at the heart of the new platforms is the idea of flexibility, for customers to be able to spread payments over a period of time, but also for merchants, encouraging sales.
He said: “In our opinion, in a similar way that ecommerce websites provide flexibility for delivering goods or services for the consumer, payment platform providers such as Spotii provides flexibility of payments for that consumer.
“In the new retail paradigm, those retailers that provide the most flexibility to their consumers, in the most transparent and efficient way possible will continue to outperform. Our analytics discovered that that even during lockdown the subset of UAE retailers with more than three payment options at checkout outperformed their industry peers by 1.6-times in terms of website traffic.
“Similarly, those that provided regular engagement with consumers through social media, thereby increasing their transparency and communication with consumers, outperformed peers by a factor of 2-times during the lockdown.”
Payment platforms are also being used to help how we consume information. Chris Forster explained how StreemPay was born “out of a frustration with paywalls during a time when we’ve all become 24/7 digital consumers because of Covid-19”.
Even before the pandemic, the number of leading US news outlets using paywalls jumped from 60 percent to 76 percent, according to a 2019 Reuters Institute report. Yet the conversion rate for some industries is sometimes less than one percent.
He said: “The fundamental flaw with paywalls is that it forces us, the users, to pay upfront for content we haven’t consumed. Users then have to claw back the value before their next subscription charge. If you have multiple subscriptions every month, it doesn’t feel like good value, it feels like a burden. That’s why most people – 74 percent UK, 63 percent US - have just one subscription; its ‘subscription saturation’.”
StreemPay is a payment platform for businesses to let users pay as they go - like setting up a tab, but one that works at every bar and restaurant on the street.
“You visit different sites, no login or registration required, we track what you consume, then we charge you at the end of the week and distribute the funds to each site accordingly. This isn’t micropayments. It’s a new type of dynamic streaming payment,” said Forster.