Zip takes a stake in Indian BNPL platform

  • By Zilla Efrat

Buy-now-pay-later (BNPL) operator, Zip, has bought a minority stake in ZestMoney, one of the largest and fastest-growing BNPL platforms in India, for US$50 million.

ZestMoney has 11 million registered users and over 10,000 online merchants on its platform, including Amazon, Flipkart and Apple. It also has a point of presence in over 75,000 physical stores.

ZestMoney offers loans to customers across short term tenures (15-30 days) as well as long term tenures (three to 18 months).

“While BNPL is emerging as a preferred mode of payment globally, in India it also plays a crucial role in driving access to credit,” explains Zip co-founder and CEO Larry Diamond.

“With more people using digital payments and online shopping, ZestMoney can positively impact hundreds of millions of lives in the coming years. With deep partnerships with online and offline merchants and lending partners, ZestMoney is poised to accelerate growth as the market develops.”

Lizzie Chapman, ZestMoney’s co-founder and CEO, adds: “The shift towards pay later solutions is a global phenomenon and represents young digital consumers looking for transparency, honesty and no hidden charges in financial products.

“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 five years.”

According to Zip, India is forecast to have more than US$300 billion in BNPL payment volume by the 2026 financial year, thanks to changing consumer spending trends and especially shifts in how young aspirational individuals view credit and engage with financial services.

Zip says only 100 million shoppers currently transact online – less than 10 per cent of India’s population – but this is expected to increase to 220 million in 2025.

India also has a large under-penetration of credit, an emerging middle class, a transforming digital payment ecosystem and robust growth in retail and eCommerce markets.

Zip has negotiated terms to increase its shareholding in ZestMoney over time.

At 30 June 2021, Zip had $461.6 million in cash and cash equivalents available and it says it remains well funded to support and accelerate its global operations. It already has a presence in Australia, Canada, Czech Republic, Mexico, New Zealand, the Philippines, Poland, Saudi Arabia, South Africa, UAE, the UK and the US.