Buy now, pay later eyes Sh3.8b transaction mark as CBK mulls regulation

Craft Silicon Founder Mr Kamal Budhabhatti (in black) conversing with other stakeholders during launch of Spotit. [Courtesy]

The Buy Now Pay Later (BNPL) market across the country has experienced significant growth.

Craft Silicon Group Chief Executive Officer Kamal Budhabatti said projections estimate a 13.6 per cent annual increase, reaching a market value of US$1.18 billion in 2025.

According to Mr Kamal, this expansion is driven by consumers' growing demand for flexible payment options and the rise of digital financial services.

He said this is evident by the fact that Spotit, a BNPL product, has hit over Sh200 million in transactions across multiple merchant partners a year after launch.

This to him, signifies consumers' appetite for fintech solutions that offer flexible repayment opportunities on products and services.

in a statement to newsrooms, Mr Kamal said Spotit initially went live with Little Sacco before its market impact began in mid-August 2024, when it officially launched with I&M Bank, unlocking access to a broader customer base.

This move coincided with the growing demand for BNPL solutions in the country, proving that the market is ripe for transformation.

Other providers operating in Kenya include Aspira, Loop, Safaricom, M-KOPA, and MasterCard.

"We envisioned Spotit as more than just a BNPL product. It is a game-changer in financial accessibility, and our journey so far has reaffirmed its necessity in the market. The response has been phenomenal, and we are excited about the future," said Mr Kamal

He added, "Our unique approach where customers are pre-approved by their banks ensures a frictionless shopping experience. Consumers can walk into any approved store knowing they have an available spending limit from their bank, making product financing more accessible than ever before."

Mr Kamal noted that the company is on track to hit Sh3.8 billion in transactions by the end of 2025, as per internal projections and bank data.

Some players in Kenya's BNPL market include M-Kopa, Safaricom's Faraja, Tala and Branch

Safaricom's Faraja, which was launched recently, offers interest-free credit to customers, allowing them to make purchases across various merchants, including Naivas outlets, Goodlife pharmacies, and City Walk. Merchants receive full payment upfront, enhancing their cash flow.

M-Kopa initially focused on financing solar energy solutions. M-Kopa has expanded to provide BNPL options for various products, targeting underbanked populations and utilizing a pay-as-you-go model.

The Tala and Branch, primarily known for micro-lending, have ventured into BNPL by offering short-term credit for purchases, leveraging their existing mobile platforms to reach a broad user base.

The rapid growth of BNPL in recent years has drawn scrutiny from regulators and lawmakers alike.

Earlier last year, MPs urged the Central Bank of Kenya to propose legislative changes that would grant it control over BNPL firms.