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| Image Credit: Zest Money |
Zip Co Ltd, a global Buy Now Pay Later provider, has invested $50 million in ZestMoney.
This is part of a larger Series C funding round that will include existing investors.
As part of the investment, Zip will receive a minority stake in the company as well as a seat on the board of directors.
While other global players are fighting it out in the US market, what's interesting about Zip is that they are following a footprint in the emerging markets or high growth markets, and they have invested in markets like the Philippines, Eastern Europe, and South Africa. This allows us to learn from them, as the Philippines and India share more similarities than the United States, Lizzie Chapman, co-founder and CEO of ZestMoney, told BusinessLine.
Zip, which was founded in Australia in 2013, now operates in 12 markets on five continents, serving over 7.3 million users and 51,000 merchants.
The funds will be used to develop ZestMoney's product suite, deepen its transaction network, increase its balance sheet capabilities, and establish new insurance and savings business lines.
Purchase now and pay later
ZestMoney, founded in 2015 by Chapman, Priya Sharma, and Ashish Anantharaman, allowing users to pay for things over time and enjoy them right now. Increased smartphone penetration, the world's lowest data plans, and a surge in online purchasing have fueled demand for Pay Later services in the country.
To approve new credit consumers, the organisation uses Artificial Intelligence and Machine Learning data models.
ZestMoney offers a full range of Buy Now, Pay Later options, with terms ranging from 30 to 24 months and ticket values ranging from $50 to $5 lakh. It is a fully digital omnichannel BNPL participant, letting clients transact across the country at over 10,000 internet sites and 75,000 physical locations.
The transition to Pay Later solutions is a global phenomenon, representing young digital consumers seeking transparency, honesty, and no hidden charges in financial products, India, like many other growing markets, would forego traditional products such as credit cards in favour of digital payment options. On our platform, BNPL applications have increased by 5X in the last year. We're continuing to put money into strengthening our relationships with our merchant network and hiring the best people. Over the next five years, we expect India will emerge as the world's largest BNPL market, Chapman added.
“While Buy Now, Pay Later is developing as a favoured means of payment globally, it also plays a critical role in boosting access to credit in India,” says Larry Diamond, CEO of Zip Co. ZestMoney has the potential to favourably touch hundreds of millions of lives in the future years as more people use digital payments and online shopping. Zest Money is set to accelerate expansion as the market grows, thanks to deep ties with online and offline businesses and financing partners.”
70% of ZestMoney's customers are from Tier II and III markets, with the majority of them getting formal credit for the first time in their life. Customers can choose from a variety of no-cost pay later options. The most popular categories on the platform include smartphones, major appliances, fashion, travel, home décor, and Edtech. Customers that use the Pay Later option like electric bikes, Ayurveda products, and personal care.
ZestMoney works with 25 banks and NBFCs to provide clients with Buy Now, Pay Later options. The Insurance Regulatory and Development Authority of India (IRDAI) has granted the company a Corporate Agent licence, allowing it to offer and enable insurance products to consumers on its platform.
ZestMoney has 11 million registered users and a merchant network of 10,000 online and 75,000 brick-and-mortar locations. It also offers credit advice, financial counselling, and ways to improve one's credit score.
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