Digital retail finance and payments company Zip Co (ASX: Z1P) has unveiled a new initiative in the Buy Now Pay Later (BNPL) industry in the form of its ‘Tap & Zip’ product feature, which it claims offers “flexible and transparent payment options that are accepted everywhere.”
Zip said its new service “reimagines” the BNPL market by enabling its users to shop anywhere that accepts Visa cards, one of the most widely used payment services in the world.
It believes Tap & Zip builds its core mission of being the first payment choice “everywhere and every day” and cited the fact that around 13% of Australian stores already accept BNPL options.
According to market analysts, the number of stores accepting such options will continue to increase, given the level of consumer convenience and low level of repayment failure rates.
The move means Zip will expand into more everyday spend categories and capitalise on the significant instore payments opportunity.
For retailers, the Tap & Zip service is expected to broaden access to new customers and to raise purchase volumes. For shoppers, the feature delivers access to a larger array of stores and a greater discretional spending ability.
Instore payments review
As a prelude to bringing Tap & Zip to the market, Zip said it conducted a strategic product review of its instore payments experience, which has been based entirely on barcode and QR technology.
Since contactless payments were introduced in Australia in 2006, Australian consumers have flocked to using contactless payments as their preferred payment option, which has accelerated the company’s move into contactless services, as well as the rapid growth of cashless living.
“With 24% of Zip transactions occurring in physical stores compared with the broader Australian retail data, which sees approximately 87% of payments instore – the opportunity to grow the BNPL share is significant,” the company said.
Zip co-founder and chief executive officer Larry Diamond said the BNPL industry has experienced phenomenal growth over the last few years, as a result of customers abandoning traditional forms of credit in exchange for flexible, digital alternatives.
“However, until now that growth has been restricted by a clunky instore checkout experience and limited acceptance,” he said.
“As a customer-obsessed organisation, we are excited to announce Tap & Zip, which completely changes the game, enabling Zip to compete with the credit card at every checkout in Australia.”
“Everywhere Australians can pay with a Visa contactless card, they’ll now also be able to Tap & Zip, interest-free. This is a huge day for Zip and the Australian retail sector,” Mr Diamond added.
In order to create and offer its new product, Zip was granted a Principal Issuer licence by Visa, leveraging Marqeta’s open-API card-issuing platform.
The companies’ combined technologies enable users to create Zip-branded virtual cards in real-time and use them instore.
As a principal member and partner of Visa, Zip is set to earn interchange revenue on transaction volume processed on its cards.
“Tap & Zip customers can enjoy the choice and flexibility that Zip provides, and know their transactions are backed by Visa’s global acceptance and multiple layers of security,” Visa group country manager for Australia, New Zealand and South Pacific, Julian Potter said.
“Visa is proud to bring its scale and capabilities to enable fintechs like Zip to develop new payment solutions and to reach their global potential,” he added.
More broadly, the company offers point-of-sale credit and digital payment services to the retail, home, health, automotive and travel industries in Australia, New Zealand, South Africa, the United Kingdom and the United States.
Zip also owns Pocketbook, a leading personal financial management tool.