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ZestMoney has raised $50 million from the global Buy Now Pay Later provider Zip Co Ltd.

This is part of a larger Series C fundraise which will see participation from existing investors. Zip will acquire a minority shareholding in the company and a board seat as part of the investment.  

Talking about the potential synergies between ZestMoney and Zip, cofounder and CEO, Lizzie Chapman told BusinessLine, “While other global players are fighting it out in the US market, what’s interesting about Zip is that they are following a footprint in the emerging markets or high growth markets, and they have invested in markets like Philippines, Eastern Europe and South Africa. This gives us an opportunity to learn from them, as there tend to be more similarities between Philippines and India, than the US,”

Founded in Australia in 2013, Zip has a presence in 12 markets across five continents, serving more than 7.3 million customers and over 51,000 merchants.

ZestMoney will deploy the funds to expand the product suite, deepen the transaction network, strengthen its balance sheet capacity and launch new business lines in insurance and savings.

Buy now, pay later

Founded by Chapman, Priya Sharma and Ashish Anantharaman in 2015, ZestMoney allows customers to pay for products over time and enjoy them now. Increasing smartphone penetration, cheapest data plans in the world and boom in online shopping has propelled the demand for Pay Later offerings in the country. 

The company uses Artificial Intelligence and Machine Learning data models to approve new to credit customers.

ZestMoney offers the entire spectrum of Buy Now, Pay Later offering from 30 days to 24 months and ticket sizes ranging from ₹50 to ₹5 lakh. It is a completely digital omnichannel BNPL player, allowing customers to transact at over 10,000 online sites and 75,000 physical stores across the country. 

Chapman said, “The shift towards Pay Later solutions is a global phenomenon and represents young digital consumers looking for transparency, honesty and no hidden charges in financial products. India will leapfrog traditional products like credit cards, along with many other emerging markets, going straight to digital payment solutions.  Over the last year, we have seen applications for BNPL go up by 5X on our platform. We continue to invest in deepening partnerships with our merchant network and hiring the best talent. We strongly believe India will emerge as the largest BNPL market in the world over the next 5 years.”

Larry Diamond, CEO of Zip Co, “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, Zest Money is poised to accelerate growth as the market develops.”

ZestMoney has 70 per cent of their customers in Tier II and III markets, majority of whom are accessing formal credit for the first time in their lives. There are several zero-cost pay later offers that customers can choose from. Smartphones, large appliances, fashion, travel, home decor, Edtech are the largest categories on the platform. Electric bikes, Ayurveda Products, and personal care are popular among customers using the Pay Later option.

ZestMoney partners with 25 banks and NBFCs to power Buy Now, Pay Later for consumers. The company recently secured the Corporate Agent licence from Insurance Regulatory and Development Authority of India (IRDAI) allowing it to offer and enable insurance products to users on its platform. 

ZestMoney has 11 million registered users and the merchant network of 10,000 online and 75,000 physical stores. It also provides credit information, financial counselling and options to build a good credit history.