As part of its worldwide growth aspirations, Australian Zip Co Limited has announced its intention to completely acquire South African buy now pay later (BNPL) fintech Payflex.
Zip intends to build its South African company and expand into other African nations with large underbanked, technologically aware populations that would benefit from new payment solutions, with a presence in twelve markets across five continents.
Payflex is South Africa’s first and largest BNPL participant, having expanded from a base of just 70 merchants in 2019 to over 1,000 active merchants today, including well-known brands like Superbalist, Cotton On, and Runwaysale.
Payflex has over 135,000 customers, which is five times the 25,000 consumers it had 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 Payflex customers who meet certain criteria to divide the cost of their purchase into four equal payments, each payable over six weeks and interest-free. Customers may apply in seconds with no paperwork, and they will only be charged a late fee if they miss a scheduled payment. Customers can use any Visa, Mastercard, or American Express card to pay their Payflex installments.
“Shoppers definitely prefer to pay for their purchases in interest-free installments 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 boosts merchant sales by 30% on average, as well as other important company indicators including cart abandonment, order frequency, revenue, and new customer acquisition. Payflex intends to add an in-store service later this year, which will considerably increase the Payflex BNPL solution’s reach and market.
“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.
