Tabby: Winning Consumers' Digital Wallets

Hosam Arab (MBA 2009), cofounder and CEO of Tabby, a Saudi-based fintech startup, raised its Series D funding round in October 2023, four years after its inception, valuing it as a regional unicorn. Tabby's core product, a buy-now-pay-later (BNPL) service, allowed consumers to split payments into four equal installments without fees. The company earned revenue by charging commissions to partnered merchants, ensuring low customer acquisition costs—a key element of Tabby’s model that facilitated rapid and cost-effective scaling. However, Tabby encountered a significant challenge in Saudi Arabia, its main market, where key retailers demanded adopting a competitor's pricing model that involved charging end consumers for BNPL services instead of merchant fees. This situation forced Tabby to consider whether to adhere to its consumer-friendly approach that spurred its growth or to adjust its strategy due to competitive pressures. The dilemma raised questions about the future standard for charging end consumers and whether Tabby should conform or maintain its original model.
The case details Tabby's journey from its founding to October 2023, highlighting its business model focused on indirect consumer acquisition and risk management. It also outlines how Tabby gained a competitive edge, selected and partnered with merchants, and leveraged BNPL as a tool for expansion into related products, thereby diversifying consumer monetization strategies.