RIYADH: Spurring a growing trend of traditional banks making investments in fintech, Dubai-based Mashreq Bank announced a $10 million investment in Cashew, one of the leading “buy now, pay later” service providers to consumers in the UAE and Saudi Arabia.
“It’s the first such investment from a traditional bank in a fintech company in the region. It’s a very strategic investment as well. It’s not only about money; it’s a lot more than that,” Cashew Payments Co-founder and CEO Ammar Afif told Arab News.
As part of the strategic investment, Mashreq will integrate Cashew Payments as an option on NEOPAY, the payments subsidiary of Mashreq, and provide support for the launch of Cashew in Egypt.
“We will offer Cashew BNPL as a payment option for NEOPAY merchants. This will help our merchants give the customers a wider choice of payment options, thereby increasing their business,” Vibhor Mundhada, the CEO of NEOPAY, told Arab News.
He added: “We will build a seamless payment experience for our online and offline merchants to accept Cashew as a payment option. We will also work on building longer tenure BNPL options.”
The deal with Mashreq is unique in the region’s fintech space because it goes beyond just a processing relationship between two financial institutions.
Cashew and Mashreq will also collaborate and offer new products to the market, including longer tenure and higher ticket-size BNPL options for consumers and introducing the first-of-its-kind point of sale lending options in the region later this year.
Additionally, Mashreq would offer Cashew services and products to its merchants and business banking customers.
It’s the first such investment from a traditional bank in a fintech company in the region.
Launched in 2020, Cashew has more than 200 retailers on the platform and is currently doing $1 million per month in transactions. “This is expected to grow tenfold by the end of the year as a result of the partnership with Mashreq,” Afif informed.
“We are the only BNPL in the region collecting data such as Emirates IDs and tying into banks to get more information to score better so that consumers who are likely to default will be rejected,” he added.
The new partnership will bring a new product to the market with key features.
“Mashreq will bring our customers many benefits as we grow our service offerings,” Afif explained. “This partnership will give consumers the largest merchant network to shop at, larger ticket size and the ability to pay over longer terms. We can only accomplish these goals for our customers by partnering with respected financial institutions like Mashreq that understand and want to be a part of the growing BNPL segment.”
NEOPAY wants to focus on adding more payment options and value-added services for its merchants, and the Cashew deal fits well with its strategy for growth.
“The focus is on using the payment data to drive business outcomes for the company’s merchants, adding more payment options from across the globe, strengthening the omnichannel payment offerings, and providing VAS bundles like enterprise resource management solutions with our payment offerings,” Mundhada said.
“Saudi Arabia obviously is the absolute right market for us to launch POS finance, which is done in a Shariah-compliant manner,” Afif informed while adding that they would offer this service in the Kingdom over the next few months.
Talking about his plans for the Saudi market, Afif reiterated that “there is a big opportunity as there are a lot of people that don’t have credit cards today because they believe credit cards may not be Shariah-compliant.”
With a mission to provide consumers with smart instant financing solutions through an intuitive and frictionless checkout experience, Cashew aims to tap segments such as education, travel, and healthcare that remain largely untapped.
Afif went on to add that he is targeting young millennials, who essentially do not have credit yet. “They have graduated from school; they have their first job; they’re trying to build their credit, but banks won’t give them a loan to buy something over 12 months or so,” he said.
“That’s where Cashew will help fill that void. Again, the ultimate relationship will be between the consumer, Cashew and the bank. So once they pay off this, they will start to establish credit. Therefore, buying a car or a house one day will become much easier.”