Australian based BNPL provider Zip set sights on India

Aussie fintech Zip eyes India as it invests $50m in local buy now, pay later player

Patrick Okwe
Patrick Okwe

In the financial services space, one thing we have consistently seen is disruption. If you are thinking about Fintechs, yes, you are correct. Fintechs has transformed financial services in recent times, making it easier for almost everyone to access financial services at a cheaper rate, such as access to credit.

Before the advent of Fintechs, getting loans in a bank was quite rigorous, as banks always insisted on collateral before giving out a loan. Coupled with this process was the interest rate attached to these loans, as it is somewhat high. Fintechs changed all this.

With Fintechs, you can get loans quickly and at a cheaper rate. Currently, there are many products in this space (credit). Even banks have adjusted their model to become relevant in this space. The implication of my previous statement is very simple, for these products to be relevant in the long run, there need to be some form of innovation. Surprisingly, there is, and it's currently disrupting the conventional way of giving credit - loans.

BNPL - The future of credit

BNPL is the future of credit, and one firm that is throwing all its weight behind this form of credit is Zip. The Australian-based firm is the second-largest BNPL firm in Australia and is currently on a spending spree. Zip recently bought South Africa BNPL provider Payflex, and a recent report suggests that it is setting sights on India as it has taken a minority stake in its Indian rival ZestMoney.

Listed Australian buy now, pay later provider Zip has agreed a $50m strategic investment in Indian BNPL firm ZestMoney, in a move designed to expose Zip to the Indian market. - altfi

As part of this latest investment, Zip says it has negotiated terms to increase its shareholding in ZestMoney over time, hinting that a full acquisition could be on the horizon per altfi. Zip's decision to throw its hat into India's BNPL space is quite understandable given India's population and the projection that it could surpass credit card payments in India by 2025.

“We believe India will leapfrog traditional products like credit cards, along with many other emerging markets, going straight to digital payment solutions. We strongly believe India will emerge as the largest BNPL market in the world over the next 5 years.”  says ZestMoney CEO and co-founder Lizzie Chapman.

Zip said its investment was part of its plan to build a global BNPL business, with India as a key market where ZestMoney already has over 11m registered users and over 10,000 online merchants.

“While Buy Now, Pay Later is emerging as a preferred mode of payment globally, in India it also plays a crucial role in driving access to credit. With more people using digital payments and online shopping, ZestMoney can positively impact hundreds of millions of lives in the coming years,” said CEO and co-founder Larry Diamond

Zip has a presence in twelve markets across five continents. The company currently serves 51,000 merchants and 7.3 million customers across 12 markets. This fiscal year, June 2021, a period when most of its acquisitions have occurred, Zip hit $5.8 billion in total transaction volume, up 176% year-over-year (YoY).

India in focus

GDP: $2.623 trillion in 2020 compared to $2.871 trillion in 2019

Population: 1.38 billion in 2020 compared to 1.366 billion in 2019

GDP per capita: $1,900 in 2020 compared to $2,100 in 2019

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Patrick Okwe

Economist | Analyst