Zip surges 17pct on new payments boom

Zip Co reports strong growth overseas, buoying revenue and Splitit inks a deal to gain access to massive overseas markets.

The strong figures from ZIP came as Splitit announced it had inked a deal with Chinese payments giant UnionPay International.

Zip Co surged 17 per cent as more customers switched on to the buy now, pay later boom this year, helping the payments company delivered record revenue and transaction volumes.

Signs of fast-paced growth and plans for further international expansion backed a boost in Shares in Zip’s buy now, pay later rivals also jumped with Afterpay adding more than 3 per cent while Splitit – which outlined plans to link up with Chinese payments giant UnionPay – ended 8 per cent higher.

Zip’s March quarter accounts showed revenue of $114.4m, an 80 per cent jump on the same time a year ago. Quarterly transaction volume of $1.6bn, which was up 114 per cent year-on-year. Zip now counts more than 6.4m customers around the world.

At the same time Zip signed up more big name merchants to its online platform including

Microsoft and retailers JD Sports, JB Hi-Fi, The Good Guys, L’Occitane and Adore Beauty.

The figures underscore the breakneck growth in the buy now, pay later sector, which has sent shares in operators soaring as they make inroads into traditional credit card markets.

Shares in Zip closed up $1.41 at $9.73. This gives the company – which is less than 10 years old and yet to turn a profit – a market capitalisation of $5.4bn, or equivalent to ASX-listed Bank of Queensland.

Zip co-founder Peter Gray said the buy now, pay later business model was “here to stay”, and that the company was just scratching the surface in capitalising on US and UK opportunities.

“This is another outstanding set of numbers delivered by the business, particularly in the US in what is typically a seasonally weak quarter,” he said.

“We are truly becoming a global provider, and it’s been so well received by the markets I think because the results were such a significant beat on all expectations.

Mr Gray said Zip’s focus would primarily be on the US, which he said had the largest addressable market opportunity for buy now, pay later among consumers who are still largely new to the trend

“It’s still in very early stages of market maturity, so there’s huge runway, not only with only but also offline with bricks and mortar retailers,” he said.

“The market can be five to 10 times bigger than the current levels of penetration, so there’s room for multiple players to have very successful businesses there.”

Zip’s US operations Quadpay powered performance at the business, with March quarter revenue growth of 188 per cent at $54.4m. This comes after Zip’s announced in June last year it would acquire Quadpay in a scrip deal for $403m.

The buy now, pay later player saw record transaction growth, up 195 per cent for the year on top of an 88 per cent increase in customer numbers.

Bad debts for the lender were helped by Australian economic support, falling from 1.93 per cent to 1.78 per cent.

Zip also announced in a market update the business was looking to further gain market share in other countries outside its current footprint.

The figures came as Splitit announced it had inked a deal with Chinese payments giant UnionPay International. The deal will integrate Splitit into UnionPay and given card holders the option to accept and make purchases using Splitit’s interest-free instalment payment options.

The deal comes on the back of deals signed between MasterCard and Visa by Splitit last year.

The deal, set to roll out from June, may see the buy now, pay later provider gain access to 180 countries and 55 million merchants.

The integration with UnionPay will progressively roll out from the Asia Pacific to other markets but will not extend to China.

However Splitit stressed the materiality of the agreement was still unknown.

Splitit chief executive Brad Paterson said the deal with UnionPay had been in the works for months.

“We’re a natural fit for the card network,” he said.

“If it makes sense to bring that service to China it’s something we’ll consider.”

Mr Paterson said the partnership is a significant milestone in the company’s Asia Pacific expansion strategy.

“Partnering with UnionPay opens up our solution to UnionPay credit card holders, building on our existing card partner networks,” he said.

“The partnership is another significant milestone in Splitit’s Asia Pacific expansion strategy to boost consumer adoption and merchant acceptance.