Australian Zip Co Limited has announced its intention to fully acquire South African buy now pay later (BNPL) fintech Payflex as part of its global expansion plans.
With a presence in twelve markets across five continents, Zip plans to grow its South African business and expand into other African markets with sizable underbanked, digitally savvy populations that will benefit from innovative payment solutions.
Payflex is the first and largest BNPL player in South Africa and has grown from a base of just 70 merchants in 2019 to over 1,000 active merchants today, including leading brands such as Superbalist, Cotton On and Runwaysale.
Over 135,000 customers have used Payflex – five times the customer base of 25,000 just a year ago (August 2020).
“The growth of Payflex over the past few years has demonstrated the demand for BNPL in South Africa. Zip’s acquisition will boost the speed and scale of Payflex’s expansion and allow merchants and shoppers to benefit from Zip’s world-class products, platform and global reach. It is also a significant vote of confidence in the all-South African Payflex team, which will remain unchanged and focused on growing the business,” says Paul Behrmann, founder and CEO of Payflex.
“This has been a truly transformational 12 months as Zip has continued to deliver, despite the most exceptional global economic conditions. We started the year with a clear strategy for global expansion, and we have seen record growth, ending the year with $5.8-billion in total transaction volume, and more than 7.3-million customers and 51k merchants around the world,” says Larry Diamond, Zip managing director and CEO.
The BNPL model allows qualifying Payflex shoppers to split the cost of their purchase into four equal instalments, payable over 6-weeks, interest-free. Shoppers can apply in seconds with no paperwork, and a late fee is only payable if they miss a scheduled instalment. Customers can pay their Payflex instalments with any Visa, Mastercard or American Express card.
“Shoppers definitely prefer to pay for their purchases in interest-free instalments when given the choice. A recent survey revealed that 80% of shoppers would not have made their most recent online purchase if not for the BNPL offering. The volumes reported by SA merchants mirror global trends, which is driving a massive rise in the number of merchants offering BNPL,” says Behrmann.
Payflex increases merchant sales by 30% on average, and drives improvements in other key business metrics, such as cart abandonment, order frequency, revenue and new customer acquisition. Payflex plans to launch an in-store offering later this year, which will significantly expand the reach and market for the Payflex BNPL solution.
“The shift away from the unfriendly world of credit cards that was the genesis of Zip’s Australian business, and it’s proven to be a global phenomenon. Millennial and Gen-Z customers are consistently demonstrating their appetite for the simpler, fairer payment options that Zip is providing. This global play supporting customers and global retailers alike provides a real point of difference as we strive to become the first payment choice and a trusted and innovative, global payments brand,” Diamond concludes.