School fees app that eases cash flow stress for MENA parents raises $9.4m

Zenda addresses 'pain points' around education expenses with pay-now and pay-later options

Students return for the first day of school at a Dubai private school. Zenda allows parents to track school fees and make payments through pay-now and pay-later options. Sarah Dea / The National

A FinTech app that enables parents in the Middle East and North Africa to settle school fees with pay-now and pay-later options has raised $9.4 million in a seed round that was oversubscribed.

The app, called zenda, addresses “pain points” around the payment of school fees through its buy now, pay later business model, the company said on Monday.

It allows families to track when school fees are due and make payments through pay-now and pay-later options, while unlocking rewards for paying on time, the start-up said.

“In today’s digital world, we seek low friction and immediacy — why should that not be the case for fee payments?” said Raman Thiagarajan, chief executive and founder of zenda.

“Part of the ecosystem still runs on cash or cheque with no convenient option to pay later. Zenda schools are witnessing a systematic increase in their collections.”

The buy now, pay later (BNPL) business model, which allows consumers to make online purchases instantly and spread their payments over a series of interest-free instalments, has boomed since the onset of the Covid-19 pandemic.

The BNPL industry is expected to grow 10 to 15 times by 2025 worldwide, topping $1 trillion in annual gross merchandise volume by some estimates, a report by New York data research consultancy CB Insights said.

There are a number of BNPL players vying for a share of the Middle East market, including Spotii, Postpay, Cashew, Tabby and Tamara.

Regional and global investors including Riyadh-focused venture capital fund STV, Cotu, Global Founders Capital and UAE-based investment platform for early-stage tech businesses VentureSouq participated in zenda's funding round.

A report published by the Knowledge and Human Development Authority in November found that more than 40 per cent of pupils at private schools in Dubai pay less than Dh18,000 ($4,900) in annual fees.

Only 9 per cent of parents pay more than Dh75,000, while another 22 per cent pay between Dh18,000 and Dh35,000, data from the KHDA shows. In 2019, the average school fee in the city’s private schools was Dh29,057.

With about $37 billion processed annually in fee payments to private educational institutions in the GCC, $34b in the rest of Middle East and Africa, and $70b in India, the market is sizeable, yet largely untapped, zenda said.

“Fee payments in schools are mostly non-digital and even where digital, are cumbersome, manual and expensive,” it added.

“Also, the majority of families earn their salaries every month but school fee payments are usually termly or bi-annual, resulting in cash flow stress for parents and collection delays for schools.”

Zenda was founded in June 2021 by Mr Thiagarajan and Haseeb Ahmed. It is their second start-up and leverages insights from their previous education technology venture.

The FinTech integrates with schools through its proprietary data model and application programming interface, according to the statement.

“The UAE itself is a $8bn-plus market for private education fees and zenda is already well-poised to capture leadership,” Ihsan Jawad, general partner at STV, said.

The FinTech’s user base has grown twenty-fold since its launch and its annual contracted total payment volume crossed $100m by the fourth quarter of last year across the UAE and India, the company said.

Zenda's future plans include enabling families’ financial wellness through tailored banking and financial experiences, it added.