KSA POS Lending Market Outlook to 2029

The report titled “KSA POS Lending Market Outlook to 2029 - By Market Structure (Banks, BNPL and Private Finance Companies), By Retail Segments (Fashion, Electronics, Furniture and others), and By Region (Riyadh, Eastern Province, Makkah)” provides a comprehensive analysis of the POS lending market in KSA. The report covers an overview and genesis of the industry, overall market size in terms of revenue, market segmentation; trends and developments, regulatory landscape, customer level profiling, issues and challenges, and comparative landscape including competition scenario, cross-comparison, opportunities and bottlenecks, and company profiling of major players in the KSA POS Lending Market. The report concludes with future market projections based on revenue, market trends, consumer behaviour, and case studies highlighting major opportunities and cautions.

KSA POS Lending Market Overview and Size 

The KSA POS lending market reached a valuation of SAR 5 Billion in 2023, driven by the growing demand for flexible financing solutions among consumers and retailers. The market is characterized by major players such as Tamara, Tabby, and Spotii, recognized for their robust technological platforms, partnerships with leading retailers, and customer-focused services. In 2023, Tamara expanded its partnership network with leading retail brands, facilitating more consumer financing options at checkout points across the country.

Market Size for KSA POS Lending Industry on the Basis of Transaction Value in USD Billion, 2018-2024

Source: TraceData Research Analysis

What Factors are Leading to the Growth of KSA POS Lending Market:

• Increased Consumer Demand for Flexibility: The shift towards cashless transactions and the rising preference for installment-based payment methods among consumers have significantly boosted the POS lending market in KSA. As of 2023, nearly 40% of retail transactions in KSA were made through POS financing options, highlighting a growing trend towards alternative payment solutions.

• Retailers' Shift to Omnichannel Models: Retailers are increasingly adopting omnichannel strategies to provide customers with seamless financing options, both online and in-store. This trend, coupled with the expansion of e-commerce in KSA, has driven demand for POS lending as a flexible and accessible financing solution.

• Government Support for Financial Technology: The KSA government's Vision 2030 initiative supports the development of financial technology (FinTech) ecosystems, which has fueled the growth of POS lending platforms. In 2023, SAR 200 million was invested in FinTech companies, further strengthening the infrastructure for POS lending services.

Challenges Impacting the Growth of the KSA POS Lending Market:

• Consumer Creditworthiness and Default Risks: A significant challenge in the POS lending market is assessing and managing creditworthiness. Data from 2023 suggests that around 25% of POS loan applicants face difficulties in obtaining approval due to low credit scores, increasing the risk of defaults and limiting market penetration.

• Regulatory Compliance and Oversight: Regulatory challenges concerning consumer protection and data security remain critical issues. In 2023, approximately 15% of POS lenders faced regulatory scrutiny due to non-compliance with data protection laws, affecting their operations and market credibility.

• Retailer Integration Costs: Many retailers face challenges integrating POS lending solutions into their existing payment systems, particularly small and medium-sized enterprises (SMEs). The cost and complexity of integration have slowed adoption rates among certain retail segments.

KSA POS Lending Market Segmentation

By Market Structure: FinTech companies dominate the market, holding a significant share due to their advanced technological platforms, easy-to-integrate solutions, and partnerships with major retailers. These companies offer seamless, user-friendly services that are attractive to both retailers and consumers. Traditional banks also participate in the market but with a smaller share, as they focus more on large-scale retailers and often provide more rigid financing structures compared to the flexibility of FinTech platforms.

By Loan Size: Small-ticket loans, typically for purchases under SAR 5000, make up most of the POS lending transactions. These loans are preferred by consumers for everyday purchases such as electronics, apparel, and household items. Large-ticket loans (above SAR 10,000) are less common but growing, especially in sectors like furniture, home appliances, and healthcare, where consumers benefit from flexible financing options.

Competitive Landscape in KSA POS Lending Market

The KSA POS lending market is relatively concentrated, with a few major players leading the space. However, the emergence of new FinTech firms and the expansion of digital payment solutions, such as Tamara, Tabby, Spotii, and Cashew, have diversified the market, offering retailers and consumers more choices and services

Some of the recent competitor trends and key information about competitor include:

• Tamara: As one of the leading FinTech platforms in KSA, Tamara recorded over 2 million active users in 2023, marking a 25% increase in user engagement compared to the previous year. The platform’s integration with top retail brands and its user-friendly installment payment plans have made it a dominant force in the KSA market.

• Tabby: Known for its focus on transparency and customer-centric services, Tabby saw a 30% increase in its retail partnerships in 2023. The platform's ability to provide flexible payment solutions for online and in-store purchases has driven significant adoption across major retail segments.

• Spotii: Specializing in installment-based payment solutions, Spotii reported a 20% growth in transactions in 2023. The company’s innovative approach to consumer financing, particularly in the fashion and lifestyle sectors, has contributed to its expanding market presence.

• Cashew: As a fast-growing FinTech firm, Cashew saw a 15% increase in its customer base in 2023, driven by its focus on the education and healthcare sectors. The company’s flexible payment models and seamless integration with service providers have made it a preferred choice for larger-ticket financing.

What Lies Ahead for the KSA POS Lending Market?

The KSA POS lending market is projected to grow steadily by 2029, exhibiting a strong CAGR during the forecast period. This growth is expected to be fueled by consumer demand for flexible financing options, the rise of e-commerce, and the continuous expansion of FinTech solutions across the Kingdom.

• Expansion into Diverse Retail Segments: As the POS lending market matures, there is an anticipated expansion into diverse retail segments such as healthcare, education, and travel. This diversification will allow consumers to access installment-based financing for larger, non-traditional purchases, further driving market growth.

• Technological Advancements in FinTech Solutions: The integration of AI, machine learning, and big data analytics is expected to enhance credit assessment and risk management in the POS lending market. These technologies will enable faster, more accurate loan approvals, making POS lending more accessible to a broader consumer base.

• Increased Adoption of BNPL (Buy Now Pay Later): The BNPL model is projected to witness increased adoption, particularly among younger, tech-savvy consumers who prefer interest-free installment options. This trend is supported by rising e-commerce penetration and growing consumer preference for flexible payment solutions.

• Regulatory Reforms Supporting FinTech Growth: The KSA government is expected to introduce further regulatory reforms under the Vision 2030 initiative, aimed at fostering FinTech innovation. These reforms will likely include enhanced data protection measures and streamlined licensing processes, making it easier for new players to enter the market.

• Partnerships Between Banks and FinTech Firms: The future of the KSA POS lending market will likely see more strategic partnerships between traditional banks and FinTech companies. These collaborations will leverage the strengths of both sectors, providing consumers with more diverse financing options and expanding the reach of POS lending services.

Future Outlook and Projections for KSA POS Lending Market on the Basis of Transaction Value in USD Billion, 2024-2029

Source: TraceData Research Analysis

KSA POS Lending Market Segmentation

By Market Structure:

• Private Finance Companies
• Traditional Banks
• BNPL Companies

By Loan Size:

• < SAR 1,000
• SAR 1,000 - 5,000
• SAR 5,000 - 10,000
• SAR 10,000
• Online
• Offline

By Mode of Lending:

By Retail Segment:

• Fashion and Apparel
• Electronics and Appliances
• Furniture and Home Goods
• Healthcare Services
• Travel and Leisure
• Education

By Age of Consumer:

• 18-24
• 25-34
• 35-44
• 45-54
• 55+

By Region:

• Riyadh
• Eastern Province
• Makkah
• Central
• Western

Players Mentioned in the Report:

• Tamara
• Tabby
• Lendo
• Mada Pay
• STC Pay
• ValU
• Cashew Payments
• Postpay
• Buy Now, Pay Later (BNPL) by Al Rajhi Bank
• Saudi Digital Payments Company (STC Pay)

Key Target Audience:

• FinTech Companies
• Traditional Banks
• Retailers
• Regulatory Bodies (e.g., Saudi Central Bank - SAMA)
• Research and Development Institutions

Time Period:

• Historical Period: 2018-2023
• Base Year: 2024
• Forecast Period: 2024-2029