- The deal creates a global payments business with more than 3.5
million customers and 26,000 merchant partners.
- To fuel further rapid growth, the combined entity has raised up
to $130m in capital from one of the world’s largest privately-held
financial services firm
High-growth, US-based payment installment platform, QuadPay, has
partnered with Australian publicly traded buy now, pay later (BNPL)
pioneer, Zip Co (ASX:Z1P), to create a $1bn+ global payments
company. The deal will continue to significantly grow the North
American BNPL market and expands the group’s reach to more than 3.5
million customers and 26,000 merchant partners worldwide. It is
backed up with $130m of capital, via convertible notes and warrants
issued to prominent growth investor, Heights Capital Management, an
affiliate of the US-based Susquehanna International Group (SIG),
which will be used to accelerate domestic and global expansion. SIG
has also made investments in Bytedance (parent company of Tik Tok),
Credit Karma and Fundera.
Founded in 2017, QuadPay was an early entrant into the US BNPL
market and has since seen rapid growth, with customer numbers
increasing by 33% in the last quarter alone. QuadPay’s 1.5m
customers are able to pay in installments across more than 3,500
integrated merchants, including leading brands like Fashion Nova,
Ugg, HYPEBEAST and For Love & Lemons.
US market ready for credit disruption
The market opportunity for BNPL in the US is one of the largest
in the world and the deal positions QuadPay strongly to seize this
opportunity. While BNPL is still in its infancy in America, the
move to alternative payments is expected to be rapid, mirroring
growth in other parts of the world. Lockdown restrictions brought
about by COVID-19 have further accelerated the growth of BNPL as
shopping migrates online.
By 2023, BNPL is expected to account for 17 percent of the
global commerce market.
Accelerated growth and development
Trading as a public company enables the combined entity to
access capital markets quickly and efficiently to support QuadPay’s
ever-growing merchant base and transaction volumes, while providing
further opportunity for:
- International expansion - post completion, the Group
will have operations across the globe in five countries (US, UK,
Australia, New Zealand, and South Africa). It will have combined
annualized GMV of $2.0b, revenue of $167m, 3.5m customers and over
26k merchants.
- Accelerated product development - QuadPay was amongst
the first BNPLs to leverage virtual-card technology in partnership
with Stripe, demonstrating a strong culture of innovation. The
additional funding will allow it to materially scale its product
and engineering capability to further its lead in product and
technology, benefiting merchants and consumers.
Focus on driving incremental merchant revenue
QuadPay has a unique and differentiated model within the US BNPL
market, offering merchants the most seamless and simple integration
online and in-store, as well as a direct-to-consumer payment
installment product through its market-leading app.
The combined force of QuadPay and Zip and additional resources
announced today will provide a wealth of new opportunities for
merchants, driving the uptake of new customers and expanding the US
BNPL market.
Merchants that already accept Visa can offer QuadPay at the
physical point-of-sale instantly and at scale, without needing to
write a single line of code or modify their POS systems. Its online
virtual checkout technology enables eCommerce websites to add
QuadPay in a few lines of front-end code without requiring any API
integrations or modifications to financial settlement,
reconciliation or refunds processes. So, whether merchants are
online-only, have one store, or one thousand, they can deploy
QuadPay and see results quicker than with any other BNPL
solution.
QuadPay merchants are experiencing an uplift of up to 25% in
conversion rates and between 20% and 60% lift in average order
value almost overnight. Forty percent of consumers say they are
more likely to complete a transaction if BNPL is offered at
checkout.
BNPL to become as ubiquitous as “free shipping”
Supported by Stripe’s issuing infrastructure, QuadPay also
pioneered the ability for consumers to shop and pay in four
installments anywhere Visa is accepted, online or in-store. The
app’s virtual card technology enables debt-conscious consumers to
buy now, pay later across millions of merchants, like Nike, Michael
Kors, Walmart and more.
QuadPay's consumer-centric approach to innovation has resulted
in strong customer advocacy (4.8 App Store rating) for its
market-leading app, which has had more than 1.2 million
downloads.
While QuadPay has some of the highest customer approval rates in
the US market, it is firmly committed to responsible lending. Both
QuadPay and Zip have financial responsibility in their DNA.
Proprietary credit assessment processes and algorithms, underpinned
by multi-factor ID verification have driven strong and continually
improving credit performance, even during the recent economic
period.
QuadPay Co-CEO and Co-Founder, Adam Ezra said: “Consumers
are increasingly avoiding credit cards and gravitating to flexible
BNPL options instead. Installment payment options are transparent,
convenient, and give consumers greater control over their finances
- they’ll soon become an expected component of the online shopping
experience, as common as free shipping. We’re incredibly excited to
be riding the wave of change and offering a product that is
friendlier to the consumer than high-interest-bearing credit cards
and digitized versions of traditional credit. We look forward to
continuing the reinvention of payments for consumers and retailers
in partnership with Zip.”
Brad Lindenberg, QuadPay Co-CEO and Co-Founder, said:
“We are to our competitors what
Stripe was to PayPal. While there are already some big names in the
market, QuadPay is by far the most technically advanced. Our
technology means that merchants as large as Target or Walmart could
roll out QuadPay online in a couple of days. No other installment
provider offers this speed of integration and becoming part of the
Zip family will provide QuadPay with access to public capital
markets to support our ever growing merchant base and transaction
volumes.”
The combined company will employ more than 400 people in five
locations across the US, Australia, United Kingdom, New Zealand and
South Africa. Both QuadPay founders remain with the business, and
are focused on driving growth in North America, scaling a business
that unifies both companies’ cultural values.
Zip CEO and Managing Director, Larry Diamond said: “Adam
and Brad are proven entrepreneurs with a great product and
high-growth business, so it’s great to welcome them and the QuadPay
team to the Zip family. Together, we are united in a shared vision
of disrupting the outdated credit card sector with digital, fairer
alternatives. QuadPay’s market-leading virtual card offering was
one of the first to launch in its category, and the company has an
unrivalled track record on customer innovation and delivering an
exceptional experience for merchants. We look forward to the
exciting road ahead.”
About the QuadPay founders:
Adam Ezra’s background is in consumer retail, finance, debt and
marketing. He has co-founded multiple businesses, including
Fashionata, an apparel group specializing in the building of
proprietary apparel brands and the distribution of leading global
lingerie and outerwear brands in Australia and New Zealand. Ezra
also has experience in private equity, investment banking and
corporate advisory, through both Illyria and Macquarie Group.
Brad Lindenberg is a seasoned technology entrepreneur with
multiple successful exits in the payments, eCommerce and media
sectors. These include CalReply, the world’s leading mobile
calendar marketing platform with over 4 million users worldwide,
which was acquired by ROKT (a $100 million revenue digital referral
marketing company) in 2017.
About QuadPay
Launched in 2017 by founders Brad Lindenberg and Adam Ezra and
headquartered in New York City, QuadPay is a leading, high-growth
U.S. installment provider that is disrupting the traditional credit
card industry. QuadPay’s mission is to give savvy shoppers more
freedom and flexibility with the option to pay in four
interest-free installments over six weeks.
Driven by a strong focus on innovation and customer-centricity,
the company has developed a market-leading app with 1.2 million
downloads and was among the first in the US market to launch
virtual card technology. This enables seamless integration for
merchants while allowing its 1.5 million customers to shop online
and in-store, not just with QuadPay’s 3,500 integrated merchants,
but with leading global retailers.
For more information, visit: www.quadpay.com.
About Zip
ASX-listed Zip Co Limited (Z1P: ASX) or (“Zip”) is a leading
player in the digital retail finance and payments industry. The
company offers point-of-sale credit and digital payment services to
the retail, home, health, automotive and travel industries. Zip has
operations across Australia, New Zealand, the USA and United
Kingdom, with associates in South Africa. Zip also owns Pocketbook,
a leading personal financial management tool and SME lending
provider Spotcap. The company is focused on offering transparent,
responsible and fairly priced consumer and SME products. Zip’s
platform is entirely digital and leverages big data in its
proprietary fraud and credit-decisioning technology to deliver
real-time consumer responses. Zip is managed by a team with over
100 years’ experience in retail finance and payments and is a
licensed and regulated credit provider.
For more information, visit: www.zip.co
Advisors
Zip was advised by:
- Financial advisor and Placement Agent: BofA Securities
- Australian legal adviser: Arnold Bloch Leibler
- US legal adviser: Skadden, Arps, Slate, Meagher & Flom
LLP
QuadPay is advised by:
- US legal adviser: DLA Piper
- Australian legal adviser: Gilbert + Tobin
View source
version on businesswire.com: https://www.businesswire.com/news/home/20200602005606/en/
Hannah Tieszen Sling & Stone for Zip and QuadPay
zipglobal@slingstone.com
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