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Zip Co Limited. providing choice and flexibility

Team Veye | 27 Oct 2020 ASX - Z1P
Zip Co Limited. providing choice and flexibility

Zip Co Limited (ASX: Z1P)

Acquisition of the Urge

Zip Co Limited (ASX: Z1P) (“Zip” or “the Company”) on 26 October 2020 announced that it had acquired all of the shares in Sydney-based technology company, Urge Holdings Pty Ltd (“Urge”) (the “Urge Acquisition”). Since inception in 2018, the Urge had been helping shoppers find and buy the items they’re looking for, driving increased sales, reach and exposure for its retail partners. The Urge’s team and its capabilities include expertise in search functionality, optimisation and indexation, all of which will be integrated into Zip’s platform globally, beginning with the QuadPay app in the US.

The Urge Acquisition involves total upfront consideration of approximately $3 million, to be settled through the issue of 432,516 fully paid ordinary shares in Zip to the shareholders of Urge. A further $5.5 million of deferred consideration may be received by Urge’s shareholders subject to certain prescribed performance milestones being achieved within the next 3.5 years (the “Milestone Consideration”).

(Chart source: TradingView)

Zip unlocks everyday payments with Tap & Zip

Zip Co Limited (ASX: Z1P) (“Zip” or “the Company”) on 20 October 2020 announced the official launch of Tap & Zip, a new product feature that reimagines buy now, pay later (BNPL) instore by enabling Zip Pay users to shop effortlessly anywhere that accepts Visa.

Tap & Zip builds on Zip’s mission to be the first payment choice everywhere and every day. It will see Zip expand into more everyday spend categories and capitalise on the significant instore payments opportunity. Currently, just 13%2 of stores in Australia are able to accept buy now, pay later options. Tap & Zip addresses this significant and untapped customer need.

Tap & Zip follows a strategic product review of Zip’s instore payments experience, which to date has been based on barcode and QR technology, which requires complex point-of-sale integrations. Ever since contactless payments were introduced in Australia in 20063 Australians have universally accepted tapping as the preferred experience. With 24% of Zip transactions occurring in physical stores compared with the broader Australian retail data, which sees approximately 87% of payments instore – the opportunity to grow the BNPL share is significant. (Data Source – Company Reports)

 

Veye’s Take

Although BNPL has seen phenomenal growth over the last few years, until now that growth has been restricted by a clunky instore checkout experience and limited acceptance. Tap & Zip, completely change this game, enabling Zip to compete with the credit card at every checkout in Australia. Everywhere Australians can pay with a Visa contactless card, they’ll now also be able to Tap & Zip, interest-free. Tap & Zip is a new way for customers to pay that will dramatically increase instore transactions and conversion rates for thousands of retailers and merchants around the country. The stock had formed head & shoulder pattern indicating some fall in prices. The company partnering with Apple and Google pay changed the sentiment. It can though, face correction up to its strong support at $5.92 but expected to return to the upper end of the channel soon where another buy could be considered. Veye maintains a "Hold" on “Zip Co Limited” at the current price of $6.36

Disclaimer

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