Assetization of Micro-Credit: An Analysis of BNPL Service Development in Iran and Its Macroeconomic Implications

Transformation in Credit Structure; Opportunities and Challenges of a New Paradigm

The recent unveiling of Bank Melli Iran’s (BMI) new credit service package—including "Melli Credit," "Melli Mehr," "Buy Now, Pay Later" (BNPL) facilities, and remote credit card issuance—signals a structural shift in Iran’s retail banking landscape. This transition from traditional, collateral-heavy facilities toward digital, behavior-based credit scoring is occurring alongside the explosive growth of private-sector fintech platforms. For instance, based on forward-looking predictive models, DigiPay, as a key player in this sector, is expected to experience a 2.4x growth in operating revenue by the fiscal year ending December 2025, reaching over 1,163 billion Tomans.

However, the rapid expansion of retail credit is taking place against a backdrop of high structural inflation, revealing a key vulnerability: the "Assetization" of consumer credit. Instead of credit lines serving as tools to smooth household consumption or stimulate domestic production, they are increasingly diverted toward highly liquid digital assets like Tether (USDT). This trend transforms consumer credit from an economic lubricant into a "Synthetic Carry Trade," exerting additional downward pressure on the Rial.

The Macroeconomic Paradox of BNPL in Iran and Globally

In developed financial markets, the BNPL model is primarily used to optimize merchant conversion rates and smooth short-term consumption. Yet, with mounting global macroeconomic pressures, the function of this tool is shifting. According to LendingTree’s 2026 projections, 25% of American citizens are expected to use BNPL services for essential groceries and daily necessities—a figure that stood at approximately 21% in 2024. This shift from "purchasing luxury or durable goods" to "securing daily survival" illustrates how short-term credit is being used to bridge the gap between stagnant real wages and rising costs of living.

In the Iranian economy, this dynamic is further complicated by chronic inflation. Iranian consumers face two structural incentives:

• Inflation Hedging: Households use short-term credit to lock in the prices of consumer goods before the national currency loses further value.
• Speculative Arbitrage: Instead of purchasing actual goods, users leverage credit lines to acquire safe-haven or quasi-dollar assets. Statistical analysis and behavioral monitoring of settlement channels indicate that approximately 18% to 22% of total retail credit allocated via fintech platforms (particularly in the form of micro-cash loans or flexible purchase plans) are ultimately transferred to cryptocurrency wallets (primarily Tether) through intermediary cycles, such as the immediate purchase and resale of highly liquid goods (like smartphones and gold coins) or direct purchases from partner gateways. Borrowing in a depreciating Rial to purchase dollar-pegged stablecoins (like Tether) creates a risk-free arbitrage opportunity, provided the rate of Rial depreciation exceeds the cost or fees of these credit facilities.

When consumer credit exits the real economy and flows into speculative markets, demand for alternatives to the Rial increases, effectively rendering the Central Bank’s contractionary policies ineffective.

Financial Sustainability Analysis of Private Credit Platforms

A deep dive into the financial statements of private platforms reveals razor-thin profit margins and heavy operating costs in this industry. Financial modeling and DigiPay’s performance forecasts for 2025 (based on forward-looking scenarios) suggest that despite the projected significant growth in operating revenue (1,163 billion Tomans) and a high gross margin (approx. 75%), the company's net profit will be limited to just 25 billion Tomans, reflecting a negligible net profit margin of 2.1%. This sharp divergence between operating revenue and net profit is rooted in the cost structure of credit fintechs in Iran:

• Surge in Selling, General, and Administrative (SG&A) Expenses: This cost category at DigiPay is projected to grow 9.4x, rising from 82 billion Tomans in 2023 to a forecasted 776 billion Tomans in 2025 (based on forward-looking budget estimates). This jump is driven by exorbitant Customer Acquisition Costs (CAC) in a competitive market, technical infrastructure development, server maintenance, and rising wages for specialized talent due to inflation.
• Cost of Capital Crisis: In an environment with an effective interest rate exceeding 35%, fintechs lack access to low-cost deposit resources (unlike commercial banks). These platforms are primarily funded through expensive bank credit lines or the issuance of debt securities, which consumes a major portion of incoming cash flow as financial expenses.
• Default Risk and Loan Loss Provisions (LLP): With the decline in household purchasing power, the default rate in retail credit portfolios is rising. To cover this risk, platforms are forced to increase financial provisioning, which directly erodes bottom-line profitability.

In this tight financial structure, fintechs are forced to increase the "Velocity of Credit" to survive. This urgent need for liquidity drives platforms to accept high-risk transactions or facilitate the purchase of quasi-paper assets and cryptocurrencies, as these channels offer the fastest capital recovery cycles.

The Mechanism of Retail Credit Transfer to the Currency Market

The diversion of Rial-denominated credit toward assets like Tether creates a direct transmission channel to the informal currency market. Based on monitoring transaction data from the payment network (Shaparak) and its intersection with outflows toward local crypto exchanges during 2023-2024, it is estimated that the equivalent of 40 to 60 billion Tomans of credit lines activated within the banking and non-banking network is converted into Rial used for Tether purchases, either directly or through an intermediary, on a daily basis. This volume of resource diversion is equivalent to approximately 15% of the total daily retail financing capacity of fintechs during peak demand seasons. This process consists of three stages:

1. Leveraged Position on the Dollar

By receiving Rial credit, the user proceeds to purchase Tether. They effectively create a leveraged "Long" position on the dollar, the financial cost of which is covered by the depreciating Rial.

2. Settlement Pressure on Exchanges

To settle these transactions, credit platforms or partner exchanges are forced to convert the user's Rial debt into hard assets, which creates constant, structural demand for Tether in the secondary market—especially in forward-looking risk scenarios, such as July 2025, where technical analysis predicts a potential widespread freezing of Iranian wallets by Tether, forcing users toward alternatives like DAI on the Polygon network.

3. Neutralization of Monetary Policy

The Central Bank attempts to curb liquidity by controlling bank balance sheets. However, the development of shadow credit outside of direct oversight neutralizes these policies, turning new liquidity directly into fuel for currency volatility.

Structural Assessment of Bank Melli Iran’s New Credit Portfolio

Strategic Solutions for Policymakers and Financial Institutions

To prevent inflationary consequences and the diversion of credit resources, the following approaches are essential:

1. Implementation of Merchant Category Code (MCC) Filtering

The Central Bank must require retail credit providers to strictly filter merchants. Consumer credit lines should only be usable for purchasing real goods and services (manufacturing, healthcare, and education), and any transactions toward crypto exchanges, stock brokerages, or gold galleries must be blocked.

2. Integration with Centralized Credit Scoring Systems (Samak and Nahab)

The separation of fintech credit data from centralized banking systems allows users to accumulate debt across multiple platforms simultaneously. Real-time connection to the Samak and Nahab systems is mandatory to accurately assess a customer’s repayment capacity.

3. Utilization of AI-Based Credit Scoring Models

To reduce the exorbitant administrative costs of platforms (such as those observed at DigiPay), traditional identity verification and document review processes should be replaced with alternative data analysis (such as utility bills and transaction behavior) to lower the cost of credit.

4. Development of Digital Collateralization Tools

To reduce default rates without increasing administrative debt collection costs, banks and fintechs must enable the immediate pledging of authorized digital assets (such as stocks, gold funds, and insurance policies) to minimize the credit risk of the loan portfolio.

Future Outlook: Survival of Credit Fintechs in a Liquidity Squeeze

Iran’s new credit paradigm is at a critical juncture. On one hand, the entry of traditional giants like Bank Melli, relying on massive balance sheets and access to low-cost resources, has sounded the alarm for private fintechs. On the other hand, private fintechs continue to hold significant market share due to their technological agility and superior user experience. However, financial analysis shows that the "Land-Grab Growth" model is no longer sustainable.

In the medium term, platforms will survive only if they can shift their business models from reliance on "interest rate spreads" to "sustainable fee-based services" and value-added services for merchants (B2B). Furthermore, the inevitable convergence between traditional banks (as liquidity providers and balance sheet owners) and fintechs (as distribution and algorithmic credit scoring arms) will be the only way for the retail credit ecosystem to survive under conditions of severe monetary contraction. Otherwise, the pressure of operating costs and default rates will trigger forced mergers or the exit of major private players.