According to GlobalData, a recognized leader in providing business information and analytics, Westpac's A$40m investment in ZipMoney could change the entire retail finance market in Australia.
The deal heralds a step change in the provision of retail credit in Australia which will effectively provide consumers with a revolving line of unsecured credit at the point of sale (POS) and so drive an increase in unsecured personal lending.
Zip provides users with an interest free period much like a credit card but over a longer period of time. However where it differs from other lenders is in the speed of its approval process which is in real time even at the POS rather than waiting for days at some banks. This provides convenience for digital savvy consumers such as Millennials where it has attracted over 665,000 users.
According to Andrew Haslip, Financial Head of Content - Asia Pacific at GlobalData, , 'Instalment payment platforms like Zip Money are not just traditional lay buy re-imagined for the digital world but really an update to the entire retail finance market.'
Westpac's investment in ZipMoney is notable not simply for its hefty price tag; the deal will see Zip's products integrated for use across Westpac's network in Australia, a huge boost for a Fintech that has only processed A$300m in transactions so far. As Westpac is the second largest Merchant Acquirer in Australia according to GlobalData's Merchant Acquiring Analytics, the scope of this boost cannot be overstated.
With Zip to be introduced and integrated into a significant slice of merchants across Australia, the service will provide consumers with a payment and financing option for a huge variety of purchases and not just Millennials looking to buy cloths online.
Given the ease of obtaining and using Zip's credit services it could well displace existing retail finance options. Consumers like it because of the lack of direct fees, while merchants like it, because they get paid upfront and their customers can buy more from them. Moreover, with the lack of direct costs, convenience and generally good customer experience, services like Zip and rival Afterpay are sure to increase the use of this type of financing, giving a shot in the arm for retail finance, an area of personal lending that has struggled to grow in recent years.