Zip Co partners with eBay Australia to offer credit options to SME sector

Buy Now Pay Later (BNPL) business Zip Co (ASX: Z1P) has partnered with eBay Australia to offer its 40,000 Australian small and medium-sized enterprise customers the opportunity to access working capital via the eBay marketplace.

The partnership coincides with the roll-out of the newly-launched Zip Business product, designed to give merchants the opportunity to access their purchase inventory, cover short-term expenses such as marketing campaigns and manage their cashflow via access to flexible lines of credit.

Zip has confirmed it will bring global small-to-medium enterprise (SME) lending provider Spotcap into the Zip Business portfolio as part of the roll-out.

The Australian and New Zealand interests of Spotcap were acquired by Zip in late 2019, giving it a proven SME finance platform, which has originated over $200 million in credit lines since first going live in 2015.

Spotcap’s technology provides Zip with a commercial decisioning engine that leverages traditional credit data, accounting data and bank transactional data to provide real-time onboarding to rapidly scale its BNPL offering.

SME market

Zip co-founder and chief operating officer Peter Gray said the eBay partnership is the first in a series of products and solutions for the SME market that will be introduced as Zip Business becomes established.

“We are excited to formally launch a suite of products for the small business community, [which we believe is] a segment that has been underserved by the traditional lenders in recent years,” he said.

“It comes at a time when Australia’s small businesses are confronting the extreme challenge of COVID-19, which has created enormous pressure on cashflows and ongoing business investment.

“A thriving small business community is critical to the health of the Australian economy and we are deeply committed to supporting the growth of these important businesses,” Mr Gray added.

Debt funding

Mr Gray said Zip has also agreed to a $100 million debt funding facility with US firm Victory Park Capital Advisors to fund Zip Business receivables.

Once established, the facility will provide the flexibility and capacity required to support the launch of Zip Business.

Zip’s partnership with Victory Park dates back to 2015, when it announced a $108 million asset-backed warehouse facility with the firm which grew to $200 million, making it one of the company’s earliest debt facility partners.

QuadPay update

Zip’s $400 million acquisition target QuadPay Inc has continued its run of record financial achievements, posting a monthly transaction volume of more than $97 million for July.

The figure represents a 30% increase on average volumes for the June quarter and an increase of more than 600% year-on-year.

The US-based BNPL player also added 133,000 customers to its books in July to surpass the 2 million customer milestone this month.

QuadPay secured partnerships with multiple online retailers including licensed sportswear seller Fanatics and Japanese e-commerce company Mercari, representing a combined online volume of over $4.17 billion.

It has also partnered with alternative financing platform Mastercard Vyze to provide businesses and customers with a seamless, instalment-based payment system for online and in-store purchases.

All partnerships are expected to go live before the US holiday period at year end.

QuadPay acquisition

In June, Zip announced it would expand into the US market by acquiring QuadPay in an all-scrip deal which will boost its customers to 3.5 million.

Zip already holds 14% equity in the three-year-old BNPL company through its acquisition of New Zealand-based global instalment technology platform PartPay last year. PartPay also has a stake in QuadPay.

That purchase made Zip the second-largest shareholder of QuadPay outside of founders Mr Gray and Larry Diamond.

The QuadPay deal will be subject to Zip shareholder approval at a meeting next week.