“From mattresses and motorbike tyres to UPS batteries and home appliances, we aim to cater to the needs of a typical household”

UZMA KHATEEB-NAWAZ: Qist Bazaar was established in 2021. Could you tell us about how it operates?
ARIF LAKHANI: Qist Bazaar is a ‘buy now, pay later’ platform that enables customers to purchase a variety of products by making an upfront payment, which includes a mark-up, and paying the balance via monthly instalments. As a registered non-banking financial corporation (NBFC), we operate in full compliance with local regulations. We consider ourselves a start-up; in May 2023, we secured our first round of funding from Bank Alfalah and raised $500,000 in seed funding. Earlier this year, we completed a Series A funding round worth $3.2 billion with Indus Valley Capital.

UKN: Who is your primary target audience?
AL: Our focus is on SEC C households with monthly incomes between Rs 35,000 and Rs 75,000.

UKN: What kind of products does Qist Bazaar offer?
AL: Our portfolio includes approximately 1,400 products that are available online and at our physical stores. From mattresses and motorbike tyres to UPS batteries and home appliances, we aim to cater to the needs of a typical household.

UKN: What brands do you offer?
AL: We prioritise affordability. For example, we offer Samsung products priced at about Rs 30,000 but avoid their premium models (priced at Rs 130,000). We are one of the largest dealers of Dawlance in Pakistan. We also stock Haier and PEL products. Premium brands such as Apple are not part of our inventory.

UKN: How does Qist Bazaar generate revenue?
AL: Primarily from profits on product sales. Higher sales lead to higher margins. We also earn revenue through mark-ups applied to the products we sell, which adhere to the Islamic principle of musawamah. This ensures transparency as the total price, inclusive of mark-ups, down payments and instalments, is communicated upfront to the customer at the time of purchase.

UKN: How has the market response been?
AL: Remarkable. Over the past 60 years, commercial banks in Pakistan have issued around two million loans, covering car, home, or personal financing. In comparison, Qist Bazaar has sold approximately 60,000 products on instalments in less than three years – a testament to the demand for our services and the exceptional response we have received.

UKN: What criteria must customers meet to qualify to purchase on instalments?
AL: Of the 60,000 products we have sold, nearly 50% of our products have been sold to micro-businesses such as naan shops, fruit vendors and rickshaw drivers. We also identify areas in various cities that are potentially lucrative or have a high default rate. Karachi, for example, is divided into 230 areas, of which 50 are high-default areas so we avoid issuing loans to residents there.

UKN: What kind of checks do you conduct on your customers?
AL: As an NBFC, we are integrated within the banking system, and this gives us access to data regarding whether or not someone has taken a loan previously from a bank or a microfinance institution. Additionally, we have our own dedicated database. Furthermore, before establishing Qist Bazaar, we operated as an offline business dealing in household items, and we have substantial data on certain clients, including records of their purchases and defaults. If we lack data on a new customer, we ask that two guarantors sign the musawamah form on their behalf. The guarantors essentially agree to support us in recovering any outstanding payments in case of a default. They don’t need to be high-ranking officials; they could be the customer’s neighbours, milkman or a relative – anyone who knows the customer.

UKN: Do customers have to provide proof of income?
AL: Absolutely not. One of the biggest challenges in Pakistan is that only about 15% of the employed population receives formal payslips. To address this, our verification officer evaluates the customer’s income informally. Based on this assessment, we ensure that the monthly instalment for any product purchased does not exceed one-tenth of their income. For example, for a household earning Rs 38,000 monthly, instalments would be capped at Rs 3,800.

UKN: How do you market Qist Bazaar?
AL: We do this through unique approaches. For example, in North Karachi, customers will often see our ads displayed on the back of a rickshaw. In Orangi (one of our primary customer areas) we distribute branded Qist Bazaar mugs at local teashops or place brochures at bus stops. We also use OOH. Additionally, we engage audiences on digital platforms such as TikTok and YouTube. As a result, we have noticed a growing interest in Qist Bazaar from a wider audience, including SEC A and B customers who increasingly use our services for large appliances such as washing machines or refrigerators on instalments.

UKN: What is the purpose of a digital branch and does Qist Bazaar operate exclusively in the digital space?
AL: Digital branches are located in areas without physical stores. They assist customers in completing paperwork for online orders. Currently, we have 11 digital branches, with two dedicated to women and students. In addition to our online presence, which is responsible for 80% of our sales, we also operate 21 brick-and-mortar outlets in major cities across Pakistan, including Gujranwala, Hyderabad, Karachi, Lahore, Rawalpindi and Sukkur.

UKN: What value additions does Qist Bazaar offer customers?
AL: We prioritise accessibility. For women, we require only one guarantor instead of two. Through our referral system, female customers can earn Rs 1,000 waivers on monthly payments for any product they purchase. We also operate female-only branches and include delivery charges in the quoted price, with no hidden costs. Early loan repayment qualifies for discounts, but we impose no penalties for late payments.

UKN: Do you have any competition in this space?
AL: There are no regulated competitors in the market. Unlike us, regulated banks require a credit history or other documentation. Our main competition comes from the unregulated sector. For example, nearly 70% of domestic staff are forced to rely on loan sharks who charge exorbitant interest rates – nearly 10% – and often use unethical means to recover their debts. In contrast, as an NBFC, we adhere to strict regulations, including ethical debt collection procedures and regular inspections by the Securities and Exchange Commission of Pakistan. For example, the law prohibits us from contacting our customers after eight in the evening.

UKN: Does Qist Bazaar have any plans to expand internationally?
AL: Not for the time being. Pakistan’s population has enormous potential and even capturing just five percent of the market would be a significant achievement for us.

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