United Arab Emirates-based lender Mashreq Bank has made a $10m equity and debt investment in local start-up Cashew.

The deal gave Mashreq Bank around a 20% stake in Cashew, which offers buy-now, pay-later services.

Cashew will integrate its services with Mashreq Bank’s new wholly-owned subsidiary, called NEOPAY, powered by Mashreq.

Cashew, which started operations in 2020, now caters to around 200 merchants and 8,000 customers on its platform.

The integration with Mashreq Bank’s platform will allow further the growth of fintech, which aims to reach 5,000 merchants and 500,000 users by the end of 2022.

The firms will also work together to create products for the UAE market.

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Mashreq Bank group head of retail banking group Fernando Morillo said: “BNPL as a mode of payment is gaining traction globally, in the wider region, and the UAE in particular, where Mashreq aims to play a key role in this space.

“We are looking at the partnership to offer more payment options to our merchant partners which would drive more business for them. We would also create longer tenure BNPL options, which would differentiate our offerings from others in the market.”

Currently, Cashew has operations in the UAE, Saudi Arabia, and Pakistan and plans to expand into Egypt and Oman in the second half of this year.

“Mashreq will work with Cashew to open up Egypt, which is a key market for BNPL in the region,” Morillo added.

Cashew co-founder and CEO Ammar Afif noted that the investment will also allow the start-up to offer larger sized loans.

The BNPL player is looking to raise an additional $30m this year and has been in touch with lenders in Oman and Saudi Arabia to integrate Cashew with their payments businesses.