You use your digital wallet to pay a bill, transfer money, or buy a product. But what if the wallet itself could offer financing?

This shift is beginning to emerge as fintech companies expand into services beyond payments. Buraq Finance, known as Barq, announced that it had received initial approval from the Saudi Central Bank to add financing to its business activities, with plans to develop financing products compliant with Islamic law.

But beyond Barq, this expansion raises a bigger question: why do payment companies want to enter the financing sector?

From Payments to a Broader Financial Relationship

At first, a digital wallet was a way to make payments and transfers easier. But when a platform offers multiple financial services, it can build a broader relationship with its customers.

Instead of using one app to make payments and then looking elsewhere when they need financing, customers can access both services through the same platform.

This is where the concept of embedded finance comes in: providing financial services within apps and platforms that customers already use.

For a company, keeping customers on the platform for longer may create more opportunities to offer additional services and better understand their financial needs, within the limits of applicable regulations and approvals.

But Financing Is Not Just Another Add-On

There is an important difference between operating a payment service and providing financing.

In payments, a company's revenue is often tied to the transactions its customers make. Financing adds a different element: the risk of nonpayment.

When a company provides financing, it must assess the customer's ability to repay, cover the cost of funding, and manage the capital and risks associated with its financing portfolio.

For this reason, financing activities in the Kingdom are subject to strict regulatory requirements. The Saudi Central Bank (SAMA) plays a key role through its Regulatory Sandbox, a controlled regulatory environment that allows companies to test innovative products and financing models safely and under direct supervision. This helps strike a careful balance between encouraging innovation and digital expansion on the one hand, and protecting customer funds and financial stability on the other. Accordingly, initial approval alone is not enough to begin operating; all regulatory requirements must be met to obtain final approval.

Is Easier Access to Financing Always an Advantage?

An app that combines payments, transfers, and financing may make financial services easier and faster for customers to access.

But easier access to financing raises another question: when it becomes easier to get financing, are people more likely to make borrowing decisions impulsively?

This is where balancing innovation with customer protection becomes important. Technology can reduce paperwork and speed up service, but it does not remove the need to assess repayment capacity and manage risk.

This makes digital wallets' move into financing more than just the addition of a new service; it marks a shift from facilitating financial transactions to taking on greater responsibility for providing them.

From Digital Wallet to Financial Ecosystem

As fintech evolves in the Kingdom, competition among digital wallets may no longer be limited to payment speed or ease of transferring money. It may also extend to the range of services a platform can offer as part of a single experience.

But the success of this model will depend not only on the number of services available, but also on a company's ability to deliver them in a way that creates value for customers while maintaining sustainability and managing risk.

Ultimately, the question may not be: what can a digital wallet offer?

But rather: how far can its services expand without easier access to financial services creating greater risks?