Sav rewards customers with cash for saving towards high-value purchases
UAE FinTech app Sav has introduced a save now, buy later feature to promote disciplined savings among residents amid increasing price pressures and higher borrowing costs.
The feature encourages people to adopt a savings-focused approach to big-ticket purchases rather than rely on credit and accumulate debt, the company said this week.
The SNBL feature presents an alternative to the buy now, pay later, or BNPL trend and incentivises users to practise good money behaviour and responsibly plan their purchases.
“The save now, buy later feature incentivises pre-planned purchases. Most of the features around affordability so far have been either credit cards or BNPL-related products,” said Purvi Munot, chief executive at Sav.
“In this geography, people want to buy large-ticket items that are aspirational purchases, such as travel, education and other things, which are typically outlays within one to six months. Sav’s SNBL solution allows users to make these high-value purchases with their own savings, without being in debt.”
The Dubai International Financial Centre-based company incentivises users for saving early towards a goal by offering them instant cash rewards when they achieve their savings milestones. This can be used for purchases. For example, the rewards vary from 5 per cent to 15 per cent for travel and range from 3 per cent to 12 per cent for electronics, Ms Munot said.
The BNPL business model, which allows consumers to make online purchases instantly and spread their payments out over interest free instalments, has boomed following the coronavirus pandemic, driven by millennials and Generation Z.
Global BNPL transaction values are projected to grow to $576 billion by 2026, up from $120 billion in 2021, according todata analytics company GlobalData.
However, a quarter of BNPL users in the US didn’t have an emergency fund or any other savings, according to a March report by the Consumer Financial Protection Bureau, based on a survey of 2,036 consumers.
Users in the UAE can opt for the SNBL feature either directly as a payment option on the merchant’s website or on the merchant’s embedded store within the Sav app,which has onboarded nine merchants with 10 more in the pipeline.
Drawing insights from its 45,000-plus users, Sav identified the top three categories for savings as travel, home and furniture, and education, in addition to emerging savings areas including cars, electronics and jewellery.
“We are not telling the customer not to consume, but instead helping them to consume responsibly as well as being in control of their money,” Ms Munot said.
“Globally, people are trying to break free from debt because the overall cost of borrowing is going up. People are already stretched with their outstanding loans. There is an increasing shift where consumers prefer extra cash over instalments.”
Sav helps users set saving goals for short-term purchases like jewellery, phone, staycation and festivals, for “bucket list goals” such as car upgrades, home renovation, new business, new home and a wedding, as well as long-term goals like retirement, health insurance and buying gold.
The app is connected to the user’s bank account to help them track spending, set budgets and save money.
It also comes with a virtual Visa debit card that can be used to access savings to make purchases.
Sav has partnered with payments infrastructure providers NymCard and Mashreq Bank to store customers’ money.