Zip Co Ltd, an Australian buy-now-pay-later company, announced on Wednesday that it has agreed to invest $50 million in a minority stake in Indian competitor ZestMoney as part of its global expansion aspirations.
The investment comes when the BNPL sector grows in popularity, with customers paying in installments without interest for online purchases, as the COVID-19 pandemic has encouraged young shoppers to seek more accessible credit.
Zip, Australia’s second-largest BNPL, is increasing its footprint in the rapidly developing sector, having acquired companies in Europe and the Middle East last year.
With its investment in Bengaluru, India-based fintech ZestMoney enters a market with an ample young demographic migrating toward cashless payments and has a lot of room for growth in the BNPL and e-commerce space.
“With deep partnerships with online and offline merchants and lending partners, ZestMoney is poised to accelerate growth as the market develops,” Zip Chief Executive Officer Larry Diamond said.
Zip said it had reached an agreement with ZestMoney to gradually grow its stake in the company.
Established players in the BNPL field have been experimenting with novel business areas to support expansion, with Australian BNPL behemoth Afterpay receiving a $29 billion deal from Square Inc and PayPal acquiring a Japanese company for $2.7 billion.