Australian Securities Exchange-listed digital payments company Zip Co intends to fully acquire South African buy-now-pay-later (BNPL) fintech firm Payflex, as part of its global expansion plans.
Zip offers point-of-sale credit and digital payment services to cross-sector firms in 12 markets, including the US, Australia, New Zealand, the UK, Canada and Mexico.
The company plans to grow the South African business and expand into other African markets that have sizable under-banked, digitally-savvy populations that will benefit from innovative payment solutions, according to a statement.
Zip, which also owns Pocketbook, a personal financial management tool, was previously known as ZipMoney.
Payflex bills itself as the largest BNPL player in South Africa, having grown from a base of 70 online merchant partners in 2019, to a network of over 1 000 active merchants, which include brands such as Superbalist, Cotton On and Runwaysale.
“The growth of Payflex over the past few years has demonstrated the demand for BNPL in South Africa,” says Paul Behrmann, founder and CEO of Payflex.
“Zip’s acquisition will boost the speed and scale of Payflex’s expansion, and allow merchants and shoppers to benefit from Zip’s products, platform and global reach. It is also a significant vote of confidence in the all-South African Payflex team, which will remain unchanged and focused on growing the business.”
The BNPL model allows qualifying Payflex shoppers to split the cost of their purchase into four equal instalments, payable over six weeks, interest-free.
Shoppers can apply in seconds with no paperwork. A late fee is payable if they miss a scheduled instalment.
Industry pundits previously told ITWeb the emerging payment model is expected to turbo-charge SA’s e-commerce sector, as more online retailers offer consumers flexible split-payment options, amid tough economic times.
Payflex says the payment model has increased sales for its merchant partners by 30% on average, while driving improvements in other key business metrics, such as cart abandonment, order frequency, revenue and new customer acquisition.
Payflex plans to launch an in-store offering later this year, which it says will significantly expand the reach and market for its BNPL solution.
“Shoppers definitely prefer to pay for their purchases in interest-free instalments when given the choice. A recent survey revealed that 80% of shoppers would not have made their most recent online purchase if not for the BNPL offering. The volumes reported by SA merchants mirror global trends, which is driving a massive rise in the number of merchants offering BNPL,” adds Behrmann.
Larry Diamond, Zip MD and CEO, notes the shift away from the unfriendly world of credit cards that was the genesis of Zip’s Australian business has proven to be a global phenomenon.
“This has been a truly transformational 12 months, as Zip has continued to deliver, despite the most exceptional global economic conditions. This global payment trend supporting customers and global retailers alike provides a real point of difference, as we strive to become the first payment choice and a trusted and innovative, global payments brand.
“We started the year with a clear strategy for global expansion, and we have seen record growth, ending the year with $5.8 billion in total transaction volume, and more than 7.3 million customers and 51 000 merchants around the world, ” states Diamond.
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