‎BNPL limit hike to SAR 10,000: Growth opportunity or higher risk?

Source: Argaam - Main News
Source link: https://www.argaam.com/en/article/articledetail/id/1929545
Published: 2026-08-15 16:36:00
Discovered by ProcIntel: 2026-08-15 17:31:45
Category: GCC Spotlight
Geography: Saudi Arabia
Organisations: —
Review status: Pending
Record type: REAL

Summary

‎<img src="https://argaamplus.s3.amazonaws.com/17714689-bc94-4811-92a9-7968b64eb43a.png"> <hr> The Saudi Central Bank’s (SAMA) decision to raise the maximum financing limit for buy now, pay later (BNPL) transactions to SAR 10,000 under a circular issued on Dec. 24, 2025, opens a new phase of growth for the sector. The move is expected to increase average transaction values and enable providers to expand further into consumer finance, while also increasing their liquidity and capital requirements and putting greater emphasis on credit risk management. BNPL allows consumers to purchase goods or services from merchants and pay for them later in predetermined installments without incurring financing costs. The new ceiling does not mean all customers will automatically qualify for SAR 10,000. Individual limits will continue to depend on creditworthiness and repayment capacity, in line with responsible lending principles. The decision marks the latest step in the sector’s regulatory development, which began with its inclusion in the regulatory sandbox in 2020, followed by the regulation of BNPL activity in 2021 and the issuance of rules governing BNPL companies in 2023. Several providers have since moved into the financing licensing phase. According to estimates by Mordor Intelligence research firm, Saudi Arabia’s BNPL market was valued at around $4.96 billion in 2025 and is forecast to grow to $5.29 billion in 2026 and $7.31 billion by 2031, representing a compound annual growth rate of 6.66% between 2026 and 2031. Higher average transaction values Fahad A. Al-Huwaimani, a member of the Saudi Economic Association (SEA) and board member of Masar Al-Nomou Finance, said the higher ceiling is not mandatory for BNPL providers, but could have significant implications for the sector. The amount available to each customer will continue to depend on their creditworthiness, assessed through providers’ internal capabilities, external credit-scoring services and, increasingly, artificial intelligence. Many international providers set individual limits based on customer creditworthiness rather than applying a uniform ceiling across their user base, drawing on internal and external credit-scoring systems and data analytics. Al-Huwaimani expects the decision to raise average transaction values in Saudi Arabia and support the expansion of BNPL into higher-ticket categories such as electronics and furniture, as well as other higher-value goods and services. Such categories previously had relatively limited exposure to BNPL, given lower financing limits and the service’s concentration in smaller consumer purchases. Higher average transaction values could boost BNPL providers’ revenue through increased transaction volumes and merchant fees, Al-Huwaimani said. However, merchant fee rates could gradually come under pressure as competition intensifies and transaction volumes increase. Larger investments in AI Al-Huwaimani expects BNPL providers to step up investment in artificial intelligence and data analytics to improve risk assessment and set more accurate financing limits based on customers’ income and financial obligations. He said higher transaction volumes and merchant commissions should support revenue growth, although competitive pressures and rising volumes could lead to a modest decline in merchant fee rates. BNPL providers are also likely to face greater funding requirements, and need to raise additional capital and secure larger financing facilities from third parties. Moreover, competition in more developed markets has gradually shifted away from simply increasing credit limits toward improving the customer experience, accelerating approval times, reducing merchant fees and developing more innovative financing products. On the competitive landscape, Mordor Intelligence estimated that specialist fintech providers accounted for around 46.97% of Saudi Arabia’s BNPL market in 2025. However, it expects bank-linked BNPL services to record the fastest growth, with a CAGR of 28.85% through 2031. The report attributed the expected growth of bank-linked services to their established customer bases and lower funding costs, giving them greater scope to offer longer repayment tenors and compete with specialist fintech providers. Blominvest: High returns offset by reliance on external funding Afnan Khan, Head of Research at Blominvest, and Jawaher Saeed, a senior analyst at the firm, said the economics of lending businesses, whether banks or non-bank financial institutions, are driven by four key factors: financing yields, fee income, operating and tax costs, and leverage. They said the BNPL business model is largely built around merchant-funded lending economics, combining exceptionally high net financing margins with high leverage, while maintaining a cost base broadly comparable with global peers. This supports the sector’s strong profitability. An analysis of the companies’ financial statements also highlights differences between Tabby and Tamara’s business models. Tabby remains closer to a pure-play BNPL provider, while Tamara has evolved into a platform combining BNPL and consumer finance after securing a consumer finance licence in March 2025. According to Blominvest’s analysis, Tabby’s effective financing yield stood at around 19.5% in 1Q26, broadly comparable with global peer Klarna’s 22.4%. By contrast, Tamara’s effective financing yield rose to 31.7% in 1Q26 from around 20% in 2025, supported by its expansion into consumer finance following the award of its licence, putting it ahead of both Tabby and Tasheel. The combination of Tamara’s BNPL merchant network and longer-tenor financing products has provided a stronger revenue engine, although the sustainability of this growth will depend on its ability to keep credit losses under control. Blominvest estimates net financing margin after funding costs and credit losses at around 12.9% for Tabby and 16.4% for Tamara, calculated as a percentage of total assets. Tamara’s higher margin came despite credit losses equivalent to 10.0% of assets, compared with 3.2% for Tabby, highlighting the greater credit risk that can accompany expansion into higher-yielding products. <table align="center" border="1" cellpadding="0" cellspacing="0" width="100%"> <tbody> <tr > <td colspan="4" > Key Metrics </td> </tr> <tr > <td > Metric </td> <td > Tabby </td> <td > Tamara </td> <td > Saudi banks’ avg. </td> </tr> <tr > <td > Total assets </td> <td > $1.6B </td> <td > $1.8 B </td> <td > - </td> </tr> <tr > <td > Effective financing yield </td> <td > 19.5% </td> <td > 31.7% </td> <td > 5.3% </td> </tr> <tr > <td > Funding cost </td> <td > (3.4 %) </td> <td > (5.2%) </td> <td > (2.7%) </td> </tr> <tr > <td > Credit losses </td> <td > (3.2 %) </td> <td > (10%) </td> <td > (0.2%) </td> </tr> <tr > <td > Net financing margin after funding costs and credit losses </td> <td > 12.9% </td> <td > 16.4% </td> <td > 2.4% </td> </tr> <tr > <td > Operating expenses and taxes </td> <td > (8.0%) </td> <td > (7.0%) </td> <td > (1.3%) </td> </tr> <tr > <td > Net profit/assets </td> <td > 4.6% </td> <td > 7.4% </td> <td > 1.7% </td> </tr> <tr > <td > Assets/equity </td> <td > 8.4x </td> <td > 9.8x </td> <td > 6.9x </td> </tr> <tr > <td > Return on equity </td> <td > 38% </td> <td > 72% </td> <td > 12% </td> </tr> </tbody> </table> <div > Source: Blominvest analysis of financial statements. Non-bank company data are as of 1Q26. Ratios are calculated as a percentage of total assets, except for leverage and return on equity. Despite BNPL providers generating higher financing yields and returns on equity than banks, their reliance on external funding leaves portfolio growth and profitability more exposed to tighter capital markets, weaker investor appetite and rising funding costs. Different funding structures Khan and Saeed said funding costs at Saudi Arabia’s largest BNPL providers remain relatively competitive, although funding structures vary across companies. Tabby relies on senior institutional Murabaha facilities, while Tamara uses an asset-backed securitisation structure comprising multiple funding tranches. Tasheel, meanwhile, relies on Murabaha facilities provided by Saudi commercial banks, while traditional banks benefit from funding their operations primarily through customer deposits. Khan and Saeed said BNPL providers’ reliance on external funding makes portfolio growth and profitability more sensitive to capital market conditions, investor and lender appetite, and movements in funding costs. As a result, higher funding costs or weaker investor appetite could constrain providers’ ability to expand even if demand for BNPL services remains strong. Strong growth set to moderate The analysts said the sector’s early expansion benefited from low BNPL penetration, a consumer credit gap and limited installment options offered by banks. As the market matures, however, growth is likely to gradually normalise. Khan and Saeed expect the sector to continue expanding over the coming years, supported by the persistent consumer credit gap, growth in e-commerce and digital payments, and wider merchant adoption. Further growth should come from longer-tenor consumer finance, higher average order values following the increase in financing limits, and the development of broader financial ecosystems beyond BNPL. Access to larger and more diversified funding sources will be critical to sustaining portfolio growth. Impact of higher limits on funding and asset quality Khan and Saeed said the higher financing ceiling would increase providers’ liquidity and capital requirements, requiring BNPL companies to secure additional funding. The impact on credit quality will largely depend on how the higher limits are allocated. Credit risk should remain manageable if larger limits are primarily extended to existing creditworthy customers with proven repayment records. However, expanding them to a broader or higher-risk borrower base could lead to higher delinquencies and provisioning, weighing on asset quality and profitability. Providers may therefore need to expand their funding arrangements or raise additional capital, particularly if the new ceiling drives rapid portfolio growth or greater exposure to higher-ticket purchases. The analysts expect the change to have a greater impact on transaction values than transaction volumes, as customers gain scope to make larger purchases and increase spending through BNPL. Profitability could also improve if the higher limits are targeted at creditworthy customers, but the benefit could be eroded by higher funding costs or increased credit losses. Greater in-store adoption Sulaiman Al-Assaf, an economist and venture capital investor, described BNPL as a relatively new but promising segment in Saudi Arabia, serving customers who may have difficulty accessing bank financing or are still building their credit histories. He said quick approvals and a streamlined purchasing process give consumers greater flexibility in managing cash flow and spreading payments over time. Al-Assaf expects the higher limit to boost demand for BNPL and accelerate the sector’s growth. It should also enable consumers to finance higher-value goods and services, while supporting providers through larger financing volumes and faster capital turnover. Retailers are likely to be among the main beneficiaries, as BNPL can help drive sales, increase average basket sizes and improve conversion rates. According to Mordor Intelligence, online channels accounted for 60.74% of Saudi Arabia’s BNPL market in 2025, while point-of-sale BNPL is forecast to grow at a CAGR of 24.12% through 2031, highlighting increasing adoption in physical stores alongside e-commerce. Fashion and personal care accounted for 37.18% of the market in 2025, while healthcare is forecast to be the fastest-growing segment, with a CAGR of 33.97% through 2031, driven by the expansion of installment plans for dental care, optical services and elective procedures. Risk of accumulation of financial obligations Al-Assaf cautioned that wider BNPL adoption could increase the risk of consumers accumulating financial obligations, particularly among those with limited financial awareness or those using the service for discretionary purchases. Individual installments may appear manageable in isolation but can become a significant monthly burden when consumers use BNPL across multiple merchants or providers. Late payments could also result in fees and adversely affect customers’ credit records, underscoring the need for stronger financial literacy as the sector expands. Al-Assaf also stressed the importance of clearly showing customers their total financial obligations before completing a transaction, rather than displaying only the individual installment amount, to help them make decisions aligned with their ability to repay. </div>

Procurement Relevance Gate

PASS — score 31.6/100 — evaluated 2026-08-15 17:31:45

Passed on: capacity_production_disruption, price_availability_leadtime_demand, geographic_exposure (score 31.6/100, threshold 20.0).

capacity_production_disruption (weight 12) — matched on "capacity"
price_availability_leadtime_demand (weight 10) — matched on "demand"
geographic_exposure (weight 8) — matched on "1 linked geography"

Initial Signal Assessment ProcIntel's automatic, provisional read of this individual Signal -- Initial Significance and Initial Confidence, computed deterministically before any Event extraction or human review.

A provisional, automatically-computed reading of this individual Signal, before Event extraction or human review. Not a final rating.

Initial Significance: 2 · Moderate (39.0/100)
Initial Confidence: 1 · Very Low (16.5/100)
Data sufficiency Whether enough structured evidence exists to trust this Signal's Initial Confidence reading. 'Sufficient' has no cap; 'Partial' and 'Insufficient' cap Confidence until more evidence is available; 'Not Assessed' means the Signal did not pass the Relevance Gate.: Partial
Strongest contributor: Procurement Impact
Limiting factor: Likely Event Severity

Initial Significance Moderate (39.0/100). Strongest contributor: Procurement Impact (27.0/30 points). Limiting factor: Likely Event Severity (3.0/30 points). Initial Confidence Very Low (16.5/100, data sufficiency: Partial). Strongest contributor: Source Authority (20.0/40 points). Limiting factor: Corroboration (2.5/25 points).

No likely Event type matched; a low contextual baseline was applied.
No eligible (non-geographic, non-fictional) entities were linked to this Signal.
no matched Event type
no actor entities (only attribution/metadata, if any)
no actor content-derived geography
single source only
Entities were mentioned as context or document attribution rather than as actors in the reported development, so they did not increase Initial Confidence.
Geographies were mentioned only in diplomatic reaction, commentary or background context rather than as the actor, event location or affected party in the reported development, so they did not increase Initial Confidence.
Only source-level geography metadata was available.
Source metadata did not contribute to Initial Confidence.
3 distinct hedging pattern(s) matched (capped at 20).

Methodology signal_scoring_v1 — calculated 2026-08-15 17:31:45.

‎BNPL limit hike to SAR 10,000: Growth opportunity or higher risk?

Summary

Procurement Relevance Gate

Initial Signal Assessment ⓘMore about Initial Signal AssessmentProcIntel's automatic, provisional read of this individual Signal -- Initial Significance and Initial Confidence, computed deterministically before any Event extraction or human review.

Initial Signal Assessment ProcIntel's automatic, provisional read of this individual Signal -- Initial Significance and Initial Confidence, computed deterministically before any Event extraction or human review.