How buy now, pay later works in the UAE, and the rules behind it

The UAE Central Bank regulates buy now, pay later (BNPL) as Short-Term Credit: interest-free credit for up to 12 months to buy specific goods or services. BNPL apps need a Central Bank licence or a licensed bank or finance company behind them, can lend you at most AED 20,000 or three months’ verified net income, whichever is lower, and must cap total fees at 30% of the amount.

Key takeaways

• BNPL is regulated as Short-Term Credit: credit for up to 12 months to buy specific goods or services, with no interest and no collateral.
• A provider needs its own Central Bank licence, such as a restricted licence finance company licence, or must act as the agent of a licensed finance company or bank.
• One provider can lend you at most AED 20,000 or three months' verified net income at any time, whichever is lower.
• Total fees, late fees included, cannot exceed 30% of the original amount, so you never repay more than 130% of it.
• From AED 5,000, the provider must check your credit report, and every provider must report your BNPL credit to the credit bureau.

This guide explains the rules and how a plan works. For the wider topic, start from our Buy now, pay later guides.

What buy now, pay later is under UAE rules

Under UAE rules, buy now, pay later is Short-Term Credit: credit given to a UAE resident for 12 months or less to buy specific, identifiable goods or services, with no interest, no lien on collateral and no security deposit. The definition sits in the Central Bank’s Finance Companies Regulation.

What counts as Short-Term Credit

Up to 12 months

The Central Bank regulates buy now, pay later as Short-Term Credit: credit for up to 12 months to buy specific goods or services, with no interest, no lien on collateral and no security deposit.

The regulation itself never uses the phrase “buy now, pay later”. The link comes from the Central Bank: when it announced the framework on 27 December 2023, it said it was responding to growing demand for “Buy-Now, Pay-Later” and similar credit products.

Each part of the definition has a practical meaning:

• It pays for a specific purchase. The credit is tied to the goods or services you buy, not cash you can spend as you like.
• It is short. Twelve months is the outer limit, counted from the original agreement and including any restructuring or rollover.
• It is unsecured. There is no collateral and no deposit, and the provider may not use your movable or immovable property as security.
• It is interest-free. Anything you pay on top of the price must come as fees, and fees are capped, as the next sections show.

Advertising and product information must also say clearly that the product is Short-Term Credit, a useful clue when you are not sure what you are signing up for.

Who can offer it

A BNPL app that is not itself a bank or a full finance company has two routes to offer Short-Term Credit in the UAE: a licence from the Central Bank as a Restricted Licence Finance Company, or a partnership as the agent of a licensed finance company or bank. Apps such as Tabby and Tamara are examples of BNPL in the UAE; this guide does not review or compare providers.

Who may offer BNPL

CBUAE licence

Short-Term Credit may be offered by Restricted Licence Finance Companies licensed by the Central Bank, or by agents that partner with a licensed finance company or bank.

An agent of a finance company may sell credit that the finance company funds, or grant credit that the agent funds itself; either way, the caps below apply to it. When the framework was announced, unlicensed providers were told to get a restricted licence or partner with a licensed finance company or bank, and the Central Bank may penalise anyone who offers Short-Term Credit in the UAE without a licence.

When the BNPL framework was announced

27 December 2023

On 27 December 2023 the Central Bank announced the amended Finance Companies Regulation as its framework for "Buy-Now, Pay-Later" and similar short-term credit: the credit can be offered by agents of licensed banks or finance companies after Central Bank approval, or by Restricted Licence Finance Companies, and unlicensed providers had to apply for a licence or partner with a licensed finance company or bank.

How to check a provider

Check who stands behind the app before you use it: the company that provides the credit and, for an agent, the licensed bank or finance company it works with. Look for both names in the app, on the website and in the contract.

1. Find the legal name in the app’s terms, the contract or the website footer.
2. Look for the label. The product information should say clearly that the product is Short-Term Credit.
3. Check the register. The Central Bank’s Licensing page has a CBUAE Register you can search by institution name and licence type, with a full list to download. For an agent, search for its partner. If you cannot find the company, ask the provider which licence it holds or which bank or finance company it works with.
4. Read the fee disclosure. The provider must show the total fees as an amount and as a percentage of the credit, and give clear examples of how fees, especially late fees, are calculated.
5. Keep the contract. You must sign the credit documents and receive a copy signed by both you and the provider.
6. Find the complaints route. Providers must run an internal complaints process and set out its details in your agreement.

The limits that protect you

For credit from a restricted licence finance company or an agent, the Central Bank sets firm limits: no interest, a cap on how much one provider can lend you, a cap on all fees, a 12-month term, no security and a credit report check from AED 5,000. They are in Articles 23 and 24 of the Finance Companies Regulation.

Interest on BNPL

0% interest

Restricted-licence finance companies and agents must not charge interest on Short-Term Credit.

The borrowing cap limits the total Short-Term Credit one provider has extended to you at any one time. It is the lower of two figures: AED 20,000, or three months of your verified net income.

Most one provider can lend you

AED 20,000

The total Short-Term Credit a restricted-licence finance company or agent extends to one borrower at any time must not exceed AED 20,000 or three months' verified net income, whichever is lower.

Worked example

Net income of AED 6,000 or AED 9,000 a month

Both incomes are illustrations.

1. Net income AED 6,000 a month: three months is AED 6,000 × 3 = AED 18,000.
2. The lower of AED 20,000 and AED 18,000 is AED 18,000.
3. Net income AED 9,000 a month: three months is AED 9,000 × 3 = AED 27,000.
4. The lower of AED 20,000 and AED 27,000 is AED 20,000.

One provider may extend at most AED 18,000 at any time on the first income and AED 20,000 on the second.

The cap is a ceiling, not a target. The provider must also assess what you can afford and may not give you a limit the assessment shows you cannot afford, so your actual limit can be well below it.

The fee cap covers all fees on one Short-Term Credit, late payment fees included: together they cannot exceed 30% of the original credit amount. The most a provider can recover is 130% of the original credit, even if the plan is restructured, rescheduled or rolled over. The Central Bank says it will review the percentage at regular intervals, so check the current figure if you read this much later.

Cap on all BNPL fees

30%

Total fees on a Short-Term Credit, including late payment fees, must not exceed 30% of the original amount, so a borrower never repays more than 130% of the credit, even if it is restructured or rolled over.

The credit report check applies to Short-Term Credit of AED 5,000 or more: the provider must review your report before granting the credit, before approving more and before raising your limit. It needs your express consent to see the report, and it must tell you that it shares your information with the credit bureau and what late payment and default would mean for your report.

When BNPL apps check your credit

AED 5,000+

Before extending Short-Term Credit of AED 5,000 or more, the provider must check the borrower's credit report, and it must report borrower credit information to the credit bureau.

How a pay-in-4 plan works

A pay-in-4 plan splits one purchase into four instalments. You take the goods or service now, the provider gives you credit for the price, and you repay it on the schedule in your contract, with no interest on a plan covered by the rules.

Your contract sets the number of instalments, the due dates and how each one is collected. If the app takes instalments from a card you register, check which card it is. Paying instalments with a credit card moves the amount onto your card balance, and the card’s own terms, including any interest on a balance you do not clear, then apply to it. How card interest is charged is explained in credit card interest and fees.

Worked example

A purchase of AED 2,000 in 4 instalments

The purchase is an illustration. The figures show the legal ceiling, not what any provider charges.

1. Each instalment: AED 2,000 ÷ 4 = AED 500.
2. Paid on time with no fees: AED 500 × 4 = AED 2,000.
3. Fee cap, late fees included: 30% × AED 2,000 = AED 600.
4. Most you can ever be asked to repay: AED 2,000 + AED 600 = AED 2,600, which is 130% of the price (AED 2,600 ÷ AED 2,000 = 1.30).
5. If the plan is restructured or rolled over, the AED 600 ceiling still applies, and the term still cannot pass 12 months from the original agreement.

On a plan covered by the rules, this AED 2,000 purchase can never cost more than AED 2,600 in total.

If you miss an instalment, the provider can charge a late fee, but only within the 30% cap, and the provider must spell out its late fees in advance and keep them reasonable. The rules also require the provider to:

• tell you the consequences of late payment and encourage you to settle promptly
• disclose the hardship help it offers if you run into financial difficulty, including debt management options and its forbearance policy
• follow collection policies that meet the Central Bank’s consumer protection rules, and explain those policies to you
• honour the original term, without demanding full payment before the agreed end date

Because the provider reports to the credit bureau, a missed instalment can also matter for your credit report. For what usually follows a missed payment on any kind of credit, see what happens after missed payments. Missed BNPL payments in particular, including collections, are a topic of their own: see what happens if you miss a BNPL payment.

If you disagree with a fee or with how a debt is collected, complain to the provider first, using the process set out in your agreement. If that does not settle it, our guide on how to complain explains the next steps, including Sanadak, the independent ombudsman unit the Central Bank set up for complaints about the conduct of licensed financial institutions.

BNPL cards and longer plans

Some BNPL apps offer plans longer than four instalments, and some offer a card. The format does not change the rules: a product offered as Short-Term Credit still cannot run past 12 months, charge interest or take fees above 30% of the original amount.

A longer plan within 12 months follows the same caps. For example, an AED 6,000 purchase over six monthly instalments is AED 1,000 a month (AED 6,000 ÷ 6). Because the credit is AED 5,000 or more, the provider must check your credit report first, and total fees cannot pass AED 1,800 (30% × AED 6,000). The purchase is an illustration.

A plan that runs longer than 12 months does not fit the definition of Short-Term Credit, so the caps in this guide may not apply to it. Ask the provider which licence and which rules the plan falls under before you sign.

Is a BNPL card a credit card?

Not if the card is offered as Short-Term Credit: that is a separate kind of credit from a credit card, with its own limits. Check the provider’s terms to see which one a card is. Short-Term Credit must be clearly labelled as such, and the credit contract you sign must also be signed by the provider.

Credit cards follow separate Central Bank rules in Regulation No. 29/2011. Article 5 sets an income floor: banks and finance companies may issue credit cards to people with an annual income of AED 60,000 or more, or against a pledged deposit of at least AED 60,000.

Income floor for a credit card

AED 60,000 a year

Credit cards may be issued to people with an annual income of AED 60,000 or more; others can get a card only against a pledged deposit of at least AED 60,000.

The Short-Term Credit rules set no minimum income. Instead, the limit follows your income: at most three months’ verified net income, and only what the affordability assessment supports. That is why the AED 60,000 floor does not decide whether you can use BNPL, and why the rules do not require you to hold a credit card. Which payment methods an app accepts for your instalments is set by its own terms. For the card side, see our guide to credit card income rules.

When a bank offers the instalments

The AED 20,000 cap, the no-interest rule and the 30% fee cap are written for restricted licence finance companies and agents, including apps that act as agents of banks. The regulation does not say that the same caps bind a bank or a full finance company that offers instalments directly, and it does not mention credit card instalment plans. We have not found a Central Bank rule that settles this, so do not assume the BNPL caps protect you on a bank’s own instalment plan.

What the rules do say:

• An app working as a bank’s agent must follow the Short-Term Credit rules, and the bank must make sure it does.
• A full finance company may offer Short-Term Credit as part of its retail finance licence, alongside personal loans, credit cards and car loans.
• A credit card instalment plan is set up under your card agreement, and the Short-Term Credit rules do not mention it, so read its own terms for the cost and for what happens if you miss a payment. Card instalment plans and how their costs compare with BNPL are a topic of their own.

Before you accept instalments from a bank, ask for the total cost in AED, whether it includes interest, a processing fee or both, what a missed payment would cost, and whether the plan uses part of your card limit.

Risks to watch

The main risks are owing several providers at once, paying instalments with credit you do not clear, and fees that can add up to 30% of a purchase.

Plans across several apps

The AED 20,000 cap applies to each provider separately. It counts only the credit that provider has extended to you, so plans with several providers can add up to more than any one cap.

For example, with a net income of AED 8,000 a month, one provider may extend at most AED 20,000 (three months is AED 24,000, so the AED 20,000 figure is lower). Two providers at AED 15,000 each would mean you owe AED 30,000, which is 3.75 months of net income (AED 30,000 ÷ AED 8,000 = 3.75). Each provider must assess what you can afford and, from AED 5,000, check your credit report, where other BNPL contracts can appear, but the cap itself does not add your plans together. The income and balances are illustrations.

Keep one list of every plan, its remaining instalments and its due dates. Your credit report also shows your BNPL contracts in one place: see how to check your AECB report.

Your credit report

Every provider must report your credit information to the credit bureau. According to the Etihad Credit Bureau (AECB), your report can show the number of BNPL contracts, active and closed, the outstanding balance, the contract status and the remaining instalments.

BNPL and your credit score

Not in score

Under the current credit score model, buy now, pay later (BNPL) reporting does not affect the credit score, but BNPL contracts appear on the credit report and may be considered by lenders who review it.

So BNPL does not move your score under the current model, but lenders and other organisations that review your report can see your BNPL contracts and may take them into account. If a BNPL entry is wrong, the bureau says you can ask for a correction through its app. For what is reported and how it can affect later applications, read how BNPL affects your credit report.