Zip enters Indian BNPL space

Zip Co shares added over 4% on Wednesday, after the $3.5 billion digital payment services provider announced a strategic investment in ZestMoney, a leading Indian BNPL operator.

Founded in 2015, ZestMoney is one of the largest and fastest-growing BNPL platforms in India with 11 million registered users having signed up, over 10,000 online merchants on the platform and with a point of presence in over 75,000 physical stores.

The investment continues Zip’s strategy to expand its global partners in multiple markets, accelerating its forecast to become the fastest growing eCommerce payment method over the next 5 years.

Zip noted that the India market is poised for consumption-driven boom and has the potential to become one of the largest markets globally and by FY26 is forecast to have US$300 billion+ in BNPL payment volume. This will be driven by changing consumer spending trends, in particular young aspirational individuals view of credit and how they engage with financial services, coupled with currently low penetration of online shopping, where only 1004 million shoppers currently transact online, which is less than 10% of India’s population, and is expected to increase to 2205 million in 2025.

ZestMoney is already a market leader offering a highly scalable business with expanding network effects, and is currently the largest fully automated, AI-driven BNPL provider for mass market customers in India. Zest partners with over 10,000 online merchants across all major consumer verticals including Amazon, Flipkart and Apple. In addition, they have over 75,000 points of presence in physical stores significantly increasing the total addressable opportunity

Zip will acquire a minority shareholding in ZestMoney by investing US$50.0 million. Zip has also negotiated terms to increase its shareholding over time.

Zip Co-founder and Chief Executive Officer Larry Diamond said: “We are excited to partner with ZestMoney to drive fair and responsible payment solutions in India. While Buy Now, Pay Later is emerging as a preferred mode of payment globally, in India it also plays a crucial role in driving access to credit. 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. We have been incredibly impressed with the founders and leadership team and look forward to the next stage of the ZestMoney journey.”