Australian buy now, pay later (BNPL) services provider Zip Co has agreed to acquire its American rival QuadPay, expanding its reach to more than 3.5 million customers and 26,000 merchant partners worldwide.
Through the deal, Zip Co aims to create a more than $1bn global payments company, which will operate in five countries including the US, the UK, Australia, New Zealand, and South Africa.
The deal is backed by a capital of $130m through the issuance of convertible notes and warrants to Heights Capital Management. The funds will be used for accelerating both domestic and global expansion of the combined company.
QuadPay, which is said to be an early entrant into the US BNPL market, has witnessed a rapid growth, recording a 33% increase in customer numbers in the last quarter alone.
The company serves a customer base of 1.5 million, who are allowed to pay in instalments for the merchandise bought from more than 3,500 integrated merchants including leading fashion brands such as Fashion Nova, Ugg, HYPEBEAST and For Love & Lemons.
The annualised gross merchandise value (GMV) of the combined company is estimated to reach $2bn, with revenue of $167m, with 3.5 million customers and a merchant base of 26,000.
The combined entity is expected to provide new opportunities for merchants, driving the uptake of new customers. It will have workforce of over 400 across five countries.
The founders of QuadPay, Adam and Brad will continue working with the company, driving growth and scaling the business in North America.
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 Together, we are united in a shared vision of disrupting the outdated credit card sector with digital, fairer alternatives.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.”