Zip, an Australian Buy Now and Pay Later (BNPL), company acquired Payflex South Africa’s BNPL player Payflex this week for an undisclosed sum.
This piece of news highlights once more the excitement surrounding BNPL services, and the pursuit for global dominance by the top players.
We have included BNPL services such as Afterpay, Klarna, and Affirm this year. __S.4__
Australia, the U.K., and the U.S. represent key markets for BNPL service. The U.S. market has such a large population that it is predicted that 45 million BNPL users will be reached by the end of this year. This represents an 81% increase over last year. __S.7__ __S.8__
In the Middle East for example, Tamara and tabby have secured millions of equity and debt financing in order to offer BNPL services. __S.10__
Spotii wasn’t Zip’s only purchase this year. To expand its presence in these two regions, the Australian company bought U.S.-based QuadPay as well as Twisto (a BNPL service) in Czech Republic.
Payflex is the latest to join that growing list. Zip, which was founded in 2017, says it is the largest BNPL company in South Africa, with over 1,000 merchants, 135,000 customers, and a 25 percent stake in Payflex when it made its investment in South African BNPL six months ago. __S.15__
Zip’s entry into Africa is significant for many reasons. __S.17__
Although credit appetite in Africa is still in its early stages compared with Western markets, it is rapidly growing. People are now able to borrow money at outrageous interest rates, while lenders report very low NPL ratios. Imagine what will happen when consumers have access to low-interest or even zero-interest financing options offered by BNPL companies like Zip. Adoption rates are sure to skyrocket.
Zweiten, the lack of infrastructure is limiting BNPL innovation. Zip is the only new entrant that can address this issue because Zip has a substantial monetary base. __S.22__
Zip has a unique opportunity to provide credit and information on Africa, despite the lack of data or credit cards. Zip will also be able to gather additional data, build creditworthiness and offer credit card services in South Africa, and the other countries it intends expanding into.
Nigeria and Egypt are two of these markets. Zip will have to compete with local competitors like Carbon, Shahry and CredPal if it expands into these markets. __S.26__
However, Africa still doesn’t possess a market leader as most of the products have yet to be mass-produced. Zip, on the other hand has shown a lot of aggressiveness in expanding into new markets. This is evident by some numbers.
Zip currently has 51,000 merchants, and over 7.3 million customers in 12 countries. Zip reached $5.8 Billion in transaction volume during its fiscal year (June 2021), which is when the majority of its acquisitions took place. This was up 176% from last year (YoY span>
Although Zip numbers may be impressive, we have learned from the BNPL industry that this is not a market where everyone wins. Zip will make significant progress and break the market. Expect more international BNPL players. Local players will also be encouraged to improve their game, as global players are likely to have more cash than they need if the move to Africa is successful. This is good news for all parties.
Publited Fri, 3 Sep 2021 at 07:28.47 +0000