Tabby has raised $2 million in seed funding to offer instant credit to consumers through its banking partners for shopping at online and offline retailers, it announced today in a statement to MENAbytes.
The yet-to-launch startup was founded by Namshi’s co-founder and former CEO Hosam Arab earlier this year. Hosam had co-founded Namshi as one of the first Rocket Internet’s ecommerce ventures in the Middle East & North Africa in 2011 and left it in March this year after it was fully acquired by Mohamed Alabbar’s Emaar Malls. Namshi to date is Rocket Internet’s biggest exit in MENA.
And maybe that’s why Rocket Internet’s CEO Oliver Samwer is betting on Hosam’s latest venture. Tabby’s seed was led by Global Founders Capital, a Berlin-based investment firm founded by Oliver. Hong Kong-based Arbor Ventures and Dubai-based Wamda Capital also participated in the round.
When launched, Tabby will allow consumers in the United Arab Emirates and Saudi Arabia to pay for their online and offline purchases in a deferred single payment or multiple installments.
“Tabby’s proprietary decision engine allows customers to check out without the need to enter their credit or debit card details when making a purchase and thus intends to become a serious alternative to cash-on-delivery (COD),” it said in a statement.
The UAE-based startup hasn’t shared the launch date but said that it is currently in the process of integrating its technology with a number of large retail merchants in the region and when launched in the coming months, it will available on checkout pages of ecommerce platforms as a method of payment along with other usual payment options such as credit cards and COD.
A recent study (PDF) by Visa, as the statement points out, reported that the average transaction size of online purchases in UAE was $144 (per transaction) compared to $79 in mature markets and $26 in emerging markets. But majority of the online shoppers in UAE and the rest of MENA still prefer cash-on-delivery (COD) as a payment option which according to a report by Bain & Company remains one of the biggest challenges faced by ecommerce in the region.
Hosam Arab, CEO of Tabby, commenting on the occasion, said, “We’re excited to be launching a buy now, pay later business that provides great value to consumers, retailers and financial institutions while addressing the government’s goals of growing non-cash transactions in their economies.”
The retailers, using Tabby, will have the opportunity to grow revenue and transaction sizes as they would indirectly be providing their customers access to flexible payment options for making purchases. According to Tabby’s website, the retailers are paid at the time of purchase without having to wait for customers to make the payments.
Payfort, one of the leading payment gateways of the region, also offers customers of some of the businesses using its services to make purchases and pay them in installments but their model requires these customers to use credit cards (of select-banking partners). Tabby doesn’t and that’s why it should be seen as an entirely new payment option.
“Tabby customers will be able to better manage their spending by making purchases at their convenience and paying for them when they have the funds available, while retailers will benefit from being able to sell more to their customers, and gain access to a larger customer base,” added Hosam.
The startup plans to use this first round of investment to further develop its proprietary technology, grow its merchant network and hire talent across multiple geographies.