The e-commerce landscape in Egypt is rapidly evolving, and one of the key drivers of this change is the emergence of "Buy Now, Pay Later" (BNPL) options. This innovative payment solution is providing greater access to online shopping for a wider range of consumers, particularly those who are unbanked or prefer alternative payment methods.
Understanding BNPL in Egypt
In Egypt, BNPL takes the form of installment plans offered by either banks or non-banking financial institutions (NBFIs) known as consumer finance companies. These companies provide credit scoring for customers, enabling them to establish a credit limit and utilize it for purchases on e-commerce platforms like Jumia.
The credit limits evolve based on a customer's repayment history. Consistent on-time payments lead to higher limits and the ability to purchase more expensive items. This empowers a wider segment of the population to participate in e-commerce, even if they lack a traditional bank account.
A Win-Win for the Egyptian Market
The adoption of BNPL in Egypt creates a win-win scenario for both consumers and businesses. Customers gain access to credit, allowing them to purchase desired products and spread the cost over time. Businesses experience a boom in sales and customer acquisition as previously unbanked customers or those preferring alternative payment methods are now able to participate. This fuels the overall growth of the e-commerce market by fostering financial inclusion and an enhanced shopping experience.
Benefits for Consumers
Inclusion for the Unbanked: Previously, those without traditional bank accounts were largely excluded from e-commerce. BNPL, offered by consumer finance companies, eliminates this barrier by providing access to credit limits without requiring a bank account.
Financing High-Ticket Items: The ability to split payments into installments makes expensive electronics, appliances, and other high-value items more accessible to a broader customer base.
Zero-Interest Campaigns: These campaigns are either funded solely by Jumia or in partnership with the BNPL, making these purchases even more affordable for budget-conscious consumers.
Jumia: A Case Study in BNPL Success
Jumia, the leading e-commerce platform in Egypt, exemplifies the power of BNPL. Partnering with companies like Souhoola has resulted in significant sales increases during Black Friday and other sales events, particularly when zero-interest campaigns are offered. This trend highlights the growing customer preference for BNPL options.
Data suggests a significant shift in payment behavior, with the potential for the prepayment segment (including BNPL) to rival the traditionally dominant cash-on-delivery option during zero-interest campaigns. While cash remains a prevalent payment method in Egypt, the growth of BNPL indicates a move towards alternative payment solutions.
The Future of BNPL
As BNPL continues to gain traction in Egypt, we can expect to see further innovation in this space. More BNPL providers are likely to enter the market, offering even more competitive rates and flexible terms. Additionally, collaborations between e-commerce platforms, BNPL providers, and brands are expected to deepen, creating a more seamless and rewarding shopping experience for Egyptian consumers.
The emergence of BNPL in Egypt is a powerful testament to the evolving financial landscape and the growing sophistication of e-commerce solutions. By providing access to credit and facilitating a more inclusive online shopping experience, BNPL is paving the way for a brighter future for both customers and businesses in Egypt.
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Sarah Hassan
Country Manager, JumiaPay Egypt
Sarah is an experienced business leader with more than 12 years of diverse and extensive local and international experience in Financial Services, Real Estate and Retail with a strong track record of setting up and driving successful business models across various industries. She is highly skilled in Strategic Planning, P&L Ownership, Brand Management, Market Research, and Growth Marketing Strategies.
As Country Manager at JumiaPay in Egypt, Sarah contributes to the growth of a unique digital payments processing business model that empowers the digital economy with frictionless payment solutions that are convenient, safe, and easy to use. This model provides a new way to build trust between consumers and businesses to boost the financial inclusion and digital transformation in Egypt and Africa.
Sarah is an American University of Cairo (Egypt) graduate that studied Journalism and Mass communication with a concentration in Integrated Marketing Communication and a minor in Psychology.