Zip Co Ltd, the Australian buy now, pay later (BNPL) company, is acquiring rival QuadPay, the New York-based payment installment platform, the firms announced on Tuesday (June 2).
The deal creates a $1 billion global payments company with more than 3.5 million customers and 26,000 merchant partners.
“Together, we are united in a shared vision of disrupting the outdated credit card sector with digital, fairer alternatives,” said Zip CEO and Managing Director Larry Diamond in a statement. “QuadPay’s market leading virtual card offering was one of the first to launch in its category, and the company has an unrivalled track record on customer innovation and delivering an exceptional experience for merchants.”
DealStreetAsia.com reported the transaction puts Zip in line to compete with giant Australian BNPL provider Afterpay Ltd, and U.S. competitors in the booming consumer finance market. It comes as younger shoppers seek easy alternatives to interest-charging credit cards.
Under the terms of the deal, Zip will give 119 million of its shares, or nearly 25 percent of the company, to QuadPay, the report said. Zip will issue the shares, in part, by giving a stake of itself to U.S. private equity firm Susquehanna International Group, in exchange for $200 million worth of securities.
“Consumers are increasingly avoiding credit cards and gravitating to flexible BNPL options instead,” said QuadPay Co-CEO and Co-Founder Adam Ezra in a statement. “Installment payment options are transparent, convenient, and give consumers greater control over their finances, they’ll soon become an expected component of the online shopping experience, as common as free shipping.”
In an interview with PYMNTS, Anthony Eisen, co-founder and CEO of BNPL firm Afterpay, said since the pandemic emerged in March, merchants and brands have been making a digital pivot to manage in an environment that’s gone from sometimes digital to mostly digital.
When selling online became the only way to do business, he said, retailers got digital overnight.
“It wasn’t just about the normal stuff around how to do more advertising or promotion, or to focus on different things,” Eisen said. “There were a lot [of] major changes involved, logistically and structurally, for many businesses. In the last 12 weeks, we’ve seen an acceleration to digital that was probably two or three or maybe four years in the making. It really has been a seismic shift.”