Buy now, pay later’ (BNPL) is forecasted to become the fastest growing eCommerce
payment method over the next 5 years, as per the WorldPay Global Payments Report, 2021.
BNPL companies first appeared in Australia approximately five years ago. User numbers
began increasing from 2018 as more retailers and merchants participated in the business concept.
When COVID-19 struck last year, payments went completely digital and credit payments
were a blessing for many. Subsequently, BNPL emerged as a winner and the legacy continues.
ASX has a bunch of promising BNPL companies listed on it,
the sector leader being Afterpay Limited (ASX:APT), followed by Zip Co Limited (ASX:Z1P).
Zip Co’s strategic investment in ZestMoney
Zip Co has planned to enter the high growth Indian BNPL market.
It has agreed to make a strategic investment in ZestMoney, a leading Indian BNPL operator-
• ZestMoney is one of the largest and fastest growing BNPL platforms in India, driven by AI.
• It has 11 million registered users having signed up, more than 10K
online merchants on the platform. The point of presence is in a whopping 75K physical stores.
Now, the investment is consistent with Zip Co’s strategy to build a truly
global BNPL business that strengthens regional and global partners in multiple markets,
providing everyone, everywhere with access to fair and transparent payment products.
It is well funded to support and accelerate its global operations.
Notably, India could become one of the largest BNPL markets globally.
Investment overview
As part of its disciplined global investment strategy, Zip Co recognises
high growth targets in attractive markets that have the capability to create strong
standalone cashflows. This is accelerated by leveraging the Company’s scale economies,
merchant network, technology, and experience.
Other BNPL companies on ASX
Sector leader Afterpay Limited (ASX:APT) now has a market value of A$36.7 billion,
up from A$19.8 billion in August 2020.
The Company has never looked back since Square made its bid for the company.
NYSE-listed Square, Inc. recently agreed to acquire all of the issued shares in
Afterpay by way of a recommended court-approved Scheme of Arrangement in a transaction with an
implied value of approximately A$39 billion. The Transaction is expected to close in Q1 CY2022.
In conclusion
The emergence of the BNPL sector is an example of how the consumer payments landscape is changing,
facilitated by mobile technology and innovative businesses. The strong growth
in the use of BNPL in recent years suggests that an increasing number of people view these services
as a convenient and cost-effective way of making purchases.
The BNPL sector is growing swiftly with new suppliers and business models making
frequent headway. While these developments are evidence of Australia's innovative and evolving
payments system, it may also increase issues for policymakers that should be given attention.