Sydney-based fintech startup zipMoney (Zip) has secured a $40m equity investment from Westpac as part of a strategic alliance with the ‘Big 4’ bank.
The investment follows the announcement, in May, that Zip – a provider of point-of-sale credit and digital payment services – had secured a $260m debt facility with $200 million in funding from NAB.
The integration of Zip’s products and services across Westpac’s network throughout Australia will be explored by the parties as part of their strategic relationship. They will also explore other initiatives, including the provision of currently in-development B2B products and services to Westpac.
In addition to the $40 million upfront investment in zipMoney, Westpac has been granted performance options which, if exercised, will see Zip secure an additional investment of up to $8 million.
Zip CEO and managing director Larry Diamond said the deal with Westpac amounts to “serious validation” of the ASX-listed startup’s platform and offering, and represents a “significant opportunity” to accelerate its growth.
Regarding the rationale for Big Banks partnering with fintechs, Diamond commented, “Things are changing so quickly… the rise of millennials, increasing competition and customer demands and the question of what comes after credit cards. Fintech and Zip represent a pathway to the future for the major financial players who are looking to stay ahead. Zip products are a way to access new markets, new sensibilities and new ways of connecting with users. Zip will benefit from Westpac’s expertise, its 200-year history and the power of its distribution capability to help fuel our growth.”
Westpac Group Executive, Strategy & Enterprise Services, Gary Thursby said Zip’s real-time data analytics and proprietary platform “offers customers seamless payment solutions”. He added, “we look forward to working with Zip to develop these capabilities and offer Westpac customers more choice in the changing payments landscape.”