BNPL in the Gulf: Tabby, Tamara and what they change for merchants

In Riyadh and Dubai, a shopper looking at a SAR 2,000 phone may check one thing before pressing pay: can I split it? Buy now, pay later (BNPL) has become a normal part of Gulf checkouts, led by Tabby and Tamara, and for many merchants in electronics, fashion and furniture it is no longer optional. It is also not a card payment, and treating it like one causes most of the operational problems we see.

This article explains how BNPL works from the merchant’s side, what the Saudi, UAE and Kuwaiti rules say, how the order lifecycle differs between Tabby and Tamara, how refunds and returns flow, where BNPL belongs on the checkout page, and the mistakes to avoid. For the method itself, see our Tabby page.

How does BNPL work for the merchant?

Three parties, two contracts. The shopper agrees a repayment plan with the provider. The merchant agrees a commercial contract with the same provider. The provider pays the merchant for the order and collects the instalments from the shopper.

From the merchant’s side, that means:

• The merchant is paid by the provider. Tabby’s business page tells merchants they “get paid upfront with no risk” and receive the full amount in days. Tamara tells merchants they get paid upfront, every time.
• The provider carries the repayment risk. If a shopper misses an instalment, that is the provider’s problem, not a chargeback against the merchant.
• The merchant pays the provider under contract. SAMA’s rules require every contract between a BNPL company and a store to cover pricing, and neither provider publishes merchant pricing on its business page. The fee is the price of the conversion BNPL brings.
• The provider makes the credit decision. The merchant cannot overrule a rejection, so BNPL always needs a card or wallet next to it.

Scale explains why merchants accept these terms. Tabby says more than 70,000 businesses use it and that merchants can reach more than 25 million shoppers through its app.

What do the regulators require in Saudi Arabia, the UAE and Kuwait?

Saudi Arabia has the most detailed rules. SAMA’s Rules for Regulating Buy Now Pay Later Companies, issued on 17 December 2023, define BNPL as financing that lets a consumer buy goods or services without a term cost payable by the consumer. BNPL activity needs a SAMA licence. The rules then set limits that shape what a merchant can sell on BNPL:

1. No fees to the consumer. The company may not charge the consumer fees, including fees owed to contracted stores. Stores may not pass on additional fees either, and the company must monitor them.
2. A cap per consumer. Total outstanding BNPL financing per person may not exceed SAR 10,000, a figure SAMA has raised by circular and can adjust again.
3. Twelve instalments at most, collected electronically; cash collection is not allowed.
4. A written contract with each store, covering pricing, data security and dispute resolution.

The UAE regulates BNPL as short-term credit. According to Hadef & Partners, CBUAE Circular No. 3/2023 amended the Finance Companies Regulation with effect from 27 December 2023. Repayment periods are limited to 12 months, restricted licence finance companies may lend up to AED 20,000 or three months of the borrower’s verifiable net income, and providers either hold a restricted licence or work with a licensed bank or finance company. Existing unlicensed providers had 90 days to apply.

Kuwait brought BNPL into its payment rules earlier. The Central Bank of Kuwait’s updated instructions on electronic payments, announced on 16 May 2023, added BNPL services to the regulatory framework alongside five licence types for payment firms.

For a merchant, the regulation matters in two ways. Baskets above the caps will not be financed in full, and any provider you work with should be able to show the licence it operates under.

Is Gulf BNPL Sharia compliant?

It is designed to be. SAMA’s definition rules out a term cost to the consumer, so there is no interest on the plan. Tamara states that it is 100% Sharia compliant, refers to its Sharia committee, and says no late fees are charged; repeated late payment can lead to account suspension instead. Its footer says it operates under the supervision of SAMA.

Longer plans need more care. Tamara advertises plans of up to 24 months, which is longer than the 12 instalments SAMA’s BNPL rules allow, so these are a different financing product with their own terms. Merchants that market “interest-free” or “Sharia compliant” instalments should check which product the shopper is actually offered and use the provider’s own wording.

How do Tabby and Tamara orders move from checkout to settlement?

Both follow the same broad pattern: the shopper is approved and pays the first instalment, the merchant confirms the order, and the merchant captures when it fulfils. The details differ, and the details are where reconciliation breaks.

Step	Tabby	Tamara
Checkout window	Session expires 20 minutes after creation by default; payment becomes expired about 10 minutes later	Order expires if the shopper does not complete payment within 30 minutes
Success signal	Status AUTHORIZED, checked server to server; never rely on the redirect alone	Status approved after the first payment; the merchant then authorises the order
Merchant confirmation	Not a separate step	Authorise within 72 hours or the order expires
Capture	Capture request must match the payment amount; payment moves to CLOSED	Full or partial capture as items ship
If not captured	Untouched for 21 days, then Tabby may capture the remaining amount	Auto-captured 21 days after authorisation; expires if not captured or cancelled within 90 days
Settlement	Only captured payments are settled to the merchant	Capture confirms the amount for the next settlement
Refunds	Only CLOSED payments; within 180 days of creation; one full refund or several partial refunds up to the captured amount	Full or partial refund on captured orders; status becomes fully or partially refunded

Two points follow. First, a webhook or server-side status check is the signal to fulfil, never the browser redirect. Tamara’s documentation notes that its webhook still reaches the merchant when a network problem stops the shopper returning to the site. Second, capture is a business event, not a technical formality. It is what turns an approved order into money in the next settlement.

How should refunds and returns work with BNPL?

Through the provider, against the captured order. The merchant sends the refund to Tabby or Tamara, and the provider adjusts the shopper’s plan. The merchant does not refund the shopper’s card directly, because the shopper has paid the provider, not the merchant.

That means the returns process needs three things:

• The provider’s order reference stored against your order, so a refund months later goes to the right place.
• A refund window check. Tabby refunds must start within 180 days of payment creation, so late returns need to be processed before the window closes.
• Netting in reconciliation. Refunds reduce what the provider settles to you, so finance needs to match refunds to settlement lines by provider, not only by order.

Where should BNPL appear on the checkout?

Where it helps the shopper decide, and only where it can be approved. In practice:

1. On the product page, as an instalment amount, for items in a price range the provider finances.
2. In the payment step, next to cards, mada and wallets, not hidden behind them.
3. Only for eligible baskets. Hide BNPL for amounts above what the provider will finance and for currencies it does not support, so shoppers are not sent to a certain rejection.
4. With a fallback. After a BNPL rejection, return the shopper to the payment step with the order intact.

Worked example: what does BNPL cost and return?

Example figures, for illustration only.

An electronics store in Saudi Arabia sells 4,000 orders a month with an average basket of SAR 1,500. It adds BNPL and finds that 25% of orders move to it, average baskets on BNPL rise to SAR 1,800, and an extra 200 orders a month complete that previously abandoned.

	Before BNPL	With BNPL
Orders	4,000	4,200
BNPL orders	0	1,050 at SAR 1,800
Other orders	4,000 at SAR 1,500	3,150 at SAR 1,500
Revenue	SAR 6.0 million	SAR 6.6 million
BNPL fee at an assumed 5%	0	SAR 94,500

On these invented numbers, the extra orders and larger baskets outweigh the fee. With a smaller uplift, they would not. Measure conversion and basket size by method, and include refunds, before deciding where to show BNPL.

What are the common mistakes with BNPL?

• Fulfilling on the redirect. Ship only after a server-side status or webhook confirms the order.
• Forgetting to capture. Uncaptured orders are not settled, and both providers may capture on day 21 at their side.
• Capturing the wrong amount. Tabby checks that the capture matches the payment amount, so split shipments need planning.
• Surcharging BNPL in Saudi Arabia. SAMA’s rules prohibit passing fees to the consumer.
• Showing BNPL on baskets above the caps. The shopper is rejected and may leave.
• Refunding outside the provider. A refund to the shopper’s card leaves the instalment plan running.

How does Omno handle BNPL?

Omno can show Tabby in the hosted checkout from the same payment request as cards and wallets, with eligibility rules by currency, amount and customer group deciding when BNPL appears. The final status reaches the merchant by webhook, captures use the same API as other methods, and reporting splits results by provider and method for reconciliation. The hosted checkout page describes the flow.