After working in the banking and payments industry in the UAE for eight years, Ibtissam Ouassif was able to identify a range of problems that consumers in the GCC region faced when trying to gain access to financing through traditional methods. These included lengthy approval processes for credit cards and loans because of a lack of seamless digitisation from institutional banks, which led to stressful experiences for customers, Ms Ouassif says. “I saw that interest rates and hidden fees associated with credit cards and loans meant that consumers were susceptible to increased levels of debt and financial mismanagement,†she says. “The UAE was, however, still experiencing high credit card penetration and this presented a gap for a tech-driven instant financing solution.†READ MORE Generation Start-up: How Right Farm is using AgriTech to transform the food supply chain Generation Start-up: how pivoting its model helped FinTech Znap remain in business Generation start-up: How a Dubai company is helping other start-ups to scale amid pandemic In 2020, Ms Ouassif and Ammar Afif co-founded FinTech start-up Cashew Payments with the aim of giving young people and those who might not meet certain income thresholds instant access to credit. A key component in empowering consumers’ financial decisions was to offer a solution that was transparent and interest-free, she says. Cashew, which is based in the Dubai International Financial Centre, is a buy now, pay later (BNPL) service that provides consumers with a more flexible and efficient way to pay over time, thereby allowing them to better manage their cash flow. “We are trying to break the standards of payments for both customers and merchants alike, as we believe it is an industry that has probably withstood the most disruption in the past few years,†Ms Ouassif says. The BNPL business model, which allows consumers to make online purchases and spread out their interest-free repayments, has become more popular since the onset of the coronavirus pandemic. Global BNPL transaction values are projected to grow to $576bn by 2026, up from $120 billion in 2021, according to data analytics company GlobalData. BNPL accounted for 2.3 per cent of the global e-commerce market. In other words, for every $100 spent, $2 went towards a BNPL transaction, the report found. COMPANY PROFILE Name: Cashew Started: 2020 Founders: Ibtissam Ouassif and Ammar Afif Based: Dubai, UAE Industry: FinTech Funding size: $10m Investors: Mashreq, others Millennials and Generation Z are the main demographic groups driving the adoption of the BNPL model, the research found. “The Covid-19 pandemic contributed greatly to the growth of BNPL, which has become an important trend in the payments industry as it lifts pressure from financially constrained consumers,†says Beyza Karakoy, associate analyst at GlobalData. “Demand is likely to continue to increase as the rising cost of living and inflationary pressures will push more consumers towards BNPL solutions.†The business model is booming, with Sweden’s Klarna, US-based Affirm and Australia's Afterpay offering flexible financing to consumers, according to the 2020 Global Payments Report by payment processor Worldpay Group. About $4bn was invested in BNPL companies last year, up from $1.7bn in 2020, according to Crunchbase. In the Middle East, platforms such as Dubai-based BNPL start-up Tabby raised $50 million last year while Saudi Arabia's Tamara raised a record $110m in a series A round. Apple also unveiled a financial product, called Apple Pay Later, which allows users to split the cost of an Apple Pay purchase into four equal payments over six weeks without being charged interest or late fees. A wholly owned subsidiary called Apple Financing will oversee credit checks and make decisions on loans for the service, according to Bloomberg. Cash-flow management is fundamental for people saving money because it is money that they can invest in the meantime Ibtissam Ouassif, co-founder of Cashew “Cashflow management is fundamental for people saving money because it is money that they can invest in the meantime,†Ms Ouassif says. “Instead of paying Dh5,000 [$1,361] now, you can pay Dh1,500 [and] use the other Dh3,500 as you see fit until the next payment.†Cashew uses technology to automate the process, as well as assess customers' risk profiles. “We cannot accept any customer. Our credit risk is mitigated by an assessment using sound underwriting methods and augmenting static scorecards with data analytics and non-traditional assessment methodologies,†she says. The BNPL provider looks at a number of data sources, such as an IP address, purchase location and a customer’s mobile device ID and social media activity, among other factors, to assess their risk profile. A credit report is required only for big-ticket purchases and longer payment tenures, the entrepreneur says. “Fraud prevention is important for BNPL services. We work closely with our payment gateway partners to prevent fraudulent transactions and minimise loss rates.†Cashew’s clients come from a range of different backgrounds: some use the BNPL service to buy necessities, allowing them to purchase against a future salary without any additional costs, while others use it for luxuries to keep their cash flow optimal. Ibtissam Ouassif's Cashew currently offers services in the UAE and Saudi Arabia and has a staff of 60. Photo: Pawan Singh / The National Ibtissam Ouassif's Cashew currently offers services in the UAE and Saudi Arabia and has a staff of 60. Photo: Pawan Singh / The National The FinTech currently offers its services in the UAE and Saudi Arabia — the Arab world’s largest economies — through an app and a web-based platform. It also recently began working in Pakistan through a partnership. The company started operations with only three people but it has since grown to 60 employees. “We plan to enter other GCC markets in the near term. Over the long term, we will further expand across the Middle East and North Africa,†Ms Ouassif says. “We are currently servicing thousands of customers with millions in gross merchandise value and growing at a 130 per cent month-on-month rate since the UAE launch.†Mashreq, the Dubai lender controlled by the Al Ghurair family, invested $10m in Cashew this year. As part of the investment, Cashew’s payment platform will be integrated as an option on Mashreq's Neopay network, the lender's payments subsidiary. Mashreq will also support the start-up's launch in Egypt — the Arab world’s most populous economy — in the fourth quarter of this year. “Signing with one of the biggest banks as a partner gives us access to a strong balance sheet, user base and placement in the payments industry,†Ms Ouassif says. Mashreq’s investment was part of a larger funding round that involved other investors, Cashew said, without providing more details. The BNPL business model allows consumers to make online purchases and spread out their interest-free repayments. Alamy The BNPL business model allows consumers to make online purchases and spread out their interest-free repayments. Alamy “Although Cashew launched its BNPL services when the pandemic started, it helped many merchants and customers who saw the need to protect cash flow, which is what our service offers,†Ms Ouassif says. “Although retail sales were down, we did well online.†While the region continues to have longer finance approval times compared with other countries around the world, educating potential customers that they have more flexible financing options can be a challenge for many technology service companies, she says. The start-up’s growth drivers have included signing up more merchants to the platform and launching marketing campaigns that allow Cashew to reach a bigger group of end customers. If they are satisfied, they is a higher chance of them talking about their experience through word of mouth, Ms Ouassif says. The company has also conducted brand activations in malls and partner shops. “Unlike other BNPL service providers, our product offering goes beyond the traditional retail-focused pay in three or four instalments. We are a product-first company and BNPL is only one layer of the services we plan to offer in the future,†she says. Q&A with Ibtissam Ouassif, co-founder of Cashew What already successful start-up do you wish you had started? Tesla and Stripe definitely stand out for me as two of the most innovative and impactful start-ups. Stripe really changed the payments industry with their technology and seamless experience for both merchants and customers alike. Meanwhile, Tesla has created a path to a more sustainable world with the use of technology, despite being counted out for years. What is your next big dream that you plan to make a reality? Right now, I am focused fully on Cashew and the plans we have to expand into other verticals of payments and financing with the use of our technology, which will enable customers to have more flexible access to finance. What new skills have you learnt in the process of set up your start-up? Multitasking is probably the first that comes to mind. It is extremely different from working for a corporation under a line of work. Here, I have to be involved and understand every area of our business. If you could start all over again, what would you do differently? I believe in a “no regret†storyline, as everything that has happened in my life has made me the person I am today. Therefore, I would not want to change anything and would rather learn from all the experiences in my journey, especially where I have made mistakes. Who is your role model? My mother. Her resilience and ambition was engraved on me from a very young age, which inspired me to pursue my dreams and make the move to travel and try to make something happen for myself, which has led me to where I am today. Where do you see yourself in 10 years? I see myself creating an ecosystem to enable and help women to follow their entrepreneurial dreams, whereby I can share my experiences and provide a platform for like-minded women to work together and support one another.