Payments in Australia: Westpac and fintech zipMoney enter $40M strategic relationship

By on
A customer walks from a Westpac bank branch in Sydney November 3, 2014.
A customer walks from a Westpac bank branch in Sydney November 3, 2014. Reuters/Jason Reed

zipMoney has announced that it has secured over $40 million worth of strategic investment from Westpac Banking Corporation. The strategic relationship between the two parties allows them to explore the integration of Zip's products and services across Westpac's networking throughout Australia.

zipMoney said its relationship with Westpac will go “both ways.” The round includes $40 million cash upfront and another $8 million in future performance-dependent funding.

This means Westpac customers will have more options in the changing payment landscape. Westpac recognises that Zip's real-time data analytics offer "seamless" payment solutions.

It comes after the announcement of the $260 million debt facility from NAB in May. It was the largest of its kind in Australian fintech history.

The investments suggest that banks are coming to understand that working with fintechs will be a way to reach next-generation consumers and keep up with the pace of behavioural and technological changes. Larry Diamond, zipMoney co-founder, recognised that things are quickly changing. These include rising competition and customer demands as well as concerns about what comes after credit cards.

“Fintech and Zip represent a pathway to the future for the major financial players who are looking to stay ahead,” Diamond said. He added that Zip products are a way to reach new markets, new sensibilities and new ways to connect with consumers. He believes that Zip will benefit from Westpac's expertise, including the bank’s 200-year history and the power of its distribution capability.

According to Westpac Group executive Gary Thursby, the bank is excited to work with one of the country's leading fintechs with a solid vision for the future of payments in Australia. He added that Westpac's strategic relationship with Zip shows its commitment to supporting Australian fintechs.

The June quarter saw “record” result, the Sydney startup stated. User population reached 665,000 and over $300 million in transaction volume through the platform. The company reported that it raked in $5.6 million of revenue for the June quarter and $17 million for 2017.

On Monday, Zipmoney shares climbed 7 percent to $0.71. Transactions rose by 59 percent during the quarter, with customer numbers reaching 52 percent. The arrears rate was at 2.97 percent and bad debts were 1.87 percent.

Zip operates a “buy now, pay later, no interest” service. It integrates into online retail stores to be able to reach consumers. zipMoney also has a personal budgeting app called Pocketbook. The app itself reached 365,000 users during the June quarter.

Read More:

Aussies who pay cash and don’t get receipt may soon be punished

Chinatown in Sydney is becoming less Chinese

CNBC-TV18/YouTube

Join the Discussion