Islamic BNPL startup closed US$1million in seed funding
Mita Srinivasan
10x Industry

Islamic BNPL startup closed US$1million in seed funding

The UAE BNPL Business and Investment Opportunities Report 2022 stated the BNPL payments are expected to reach US$1822.7 million this year.

An Islamic Fintech startup, IMAN, closes USD$1million in seed funding to introduce a new financial product that is Shariah-compliant in Muslim markets. The new platform uses technology to democratize access to finance in line with the region’s religious views and faith.

The $1 million round was completed by a group of eight VC and institutional investment funds as well as a number of angel investors from the UAE, United States, Uzbekistan, Kazakhstan, and Singapore have also supported the company’s plans to make halal BNPL and investments accessible.

Rustam Rahmatov, Founder & CEO of IMAN, added, “This investment will help us scale our technology in order to integrate seamlessly with retail partners across the different regions both online and offline to provide finance in seconds. We will also be able to roll out partnerships with merchants across all sectors more aggressively including beauty & fashion, FMCG, and services. And lastly, this investment empowers us to start exploring opportunities in other Muslim majority markets, including GCC, in early 2023. We are extremely excited to partner with our investors who have made investments in similar businesses in other geographies and bring with them a wealth of knowledge and expertise”.

The MENA region still has a very low penetration of credit cards as people are sceptical of traditional financial institutions taking advantage of them with interest and hidden fees. To address this gap in the market, a few BNPL players, such as Tabby and Tamara, have emerged over the last couple of years, however, the industry is still at a very early stage of development growing at around 90 percent per year.

The UAE BNPL Business and Investment Opportunities Report 2022 stated the BNPL payments are expected to reach $1822.7 million this year. This is attributed to the shift in consumer behaviour largely focusing on online shopping platforms and dependency on digital payments. BNPL payments have hence become one of the fastest-growing payments methods in the country.

IMAN is unique in the BNPL domain in the sense that it not only provides halal BNPL but also builds halal funding sources for such service. Investors invest and shoppers buy goods/services from IMAN via merchants through a “cost-plus” financing structure (“Murabaha”). At the same time, there is a separate Islamic purchase/sale agreement with the merchant. Additionally, IMAN does not generate revenue from late fees or other charges that are conditional upon users missing payments. With this model, the team hopes to encourage responsible spending, which will further align spending with customers’ religious beliefs. To further accentuate its commitment to Islamic Finance principles, IMAN received compliance certification (“fatwa”) from the esteemed Islamic professor Dr Ziyaad Muhammad of INCEIF (Malaysia) and the Muslim Board of Uzbekistan.

To scale the investment platform throughout the world, IMAN is looking to build a DeFi (decentralized finance) protocol that will connect investors seeking sustainable halal yield with consumers in frontier markets where there is a gap in access to capital.

The company plans to expand into other frontier markets by early 2023 with predominantly young and tech-savvy Muslim populations, increasing disposable incomes, and rising e-commerce digital payment systems penetration.