How Fawry Made Bank In Fledgling Foray Into Tricky BNPL Scene

Egypt’s leading fintech company, Fawry, has marked a significant milestone by surpassing EGP 1 B (~USD 20 M) in total Buy Now, Pay Later (BNPL) disbursements just over a year after launching the service.

The BNPL sector, which allows consumers to spread payments over time without upfront costs, has been booming worldwide. Fawry, long established as a payments platform with services like bill payments, mobile top-ups, and e-commerce, saw an opportunity to expand into consumer finance, introducing BNPL as part of its growing portfolio in mid-2023. The quick uptake of the service points to strong demand in Egypt for flexible financial solutions, especially amid economic challenges.

CEO Eng. Ashraf Sabry emphasised the significance of this achievement, stating, “This milestone is a testament to the company’s ability to leverage its existing consumer base while introducing innovative services that cater to underserved segments of the population.” Fawry’s entry into BNPL, he noted, aligns with the company’s mission to drive financial inclusion in Egypt. By integrating BNPL into its broader suite of services, Fawry positions itself as a comprehensive financial platform.

The numbers are impressive. In just one year, Fawry’s BNPL business has generated USD 20 M in revenue. The company leveraged its digital infrastructure, particularly its myFawry app, which has over 10 million downloads, and the myFawry prepaid card, to fuel this growth. These tools allowed Fawry to seamlessly onboard customers and expand its reach, positioning itself ahead of many local competitors in the BNPL space.

However, the success comes in the context of Africa’s broader challenges in adopting BNPL services. According to Tobi Odukoya, CEO of Nigerian BNPL startup CDCare, “The high cost of credit in Africa poses a unique challenge for BNPL providers.” In Nigeria, the average interest rate is 16.5%, while retail profit margins sit between 5-10%, making it difficult for BNPL models to sustain profitability.

This reality holds for Egypt as well, where inflation and devaluation have strained consumer purchasing power. Nonetheless, Fawry has managed to navigate this tough economic landscape by focusing on essential goods and services, which are in high demand, particularly among low- and middle-income households.

Fawry’s foray into BNPL also signals a broader shift in the region’s fintech industry. Africa’s BNPL market is seeing increasing competition, with companies like South Africa’s PayFlex and Nigeria’s CredPal entering the fray. However, Fawry’s entrenched market position in Egypt gives it an edge. The company already processes more than 6 million transactions daily, serving over 52.5 million users each month. By embedding BNPL within its existing ecosystem, Fawry reduces the risk of customer churn and strengthens loyalty.

Fawry’s approach also taps into the cultural sensitivities around debt in Africa. In many parts of the continent, particularly in Muslim-majority regions, there is an aversion to traditional forms of credit. Islam prohibits interest-based lending, which limits the appeal of conventional credit products. Fawry’s BNPL service provides a viable alternative for these consumers, allowing them to make purchases on credit without the need for bank loans or credit cards.

Despite the promising start, the path ahead is not without challenges. BNPL companies face the risk of high default rates, and in Egypt, where financial literacy and debt management can be issues, Fawry will need to carefully manage this aspect of its business. Furthermore, as more players enter the BNPL space, maintaining its competitive edge will require continuous innovation. Fawry’s early success, however, positions it as a leader in Africa’s burgeoning BNPL market.

As Africa’s fintech sector continues to evolve, Fawry’s BNPL venture provides a glimpse of how established companies can expand into new territories while maintaining their core strengths. Whether Fawry’s success can be replicated in other African markets remains to be seen, but the company’s quick rise in Egypt’s BNPL scene sets a high bar for its competitors.