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zipMoney Ltd wins $40 million Westpac Banking Corp deal in white-hot growth sector

The zipMoney Ltd (ASX: ZML) share price exploded 18 per cent higher to 85 cents today after the digital payment services business announced Westpac Banking Corp (ASX: WBC) has taken a $40 million equity stake in the business.

Westpac has agreed to pay 81 cents per share for its stake and the two parties have entered into a strategic relationship “to explore the integration of Zip’s products and services across Westpac’s network throughout Australia”.

Westpac has also been granted another 9.8 million performance options at 81 cents per share that would total another $8 million equity investment if exercised. The right to exercise the options is linked to deal related revenue hurdles that Zip must post over fixed periods from vesting dates.

The agreement is a major coup for zipMoney as it seeks to aggressively expand into the white-hot “buy now, pay later” payment services space that is currently being led by the Afterpay Touchcorp (ASX: APT) group. As such investors might expect the zipMoney to receive some short-term support at least over the months ahead.

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Motley Fool contributor Tom Richardson has no position in any stocks mentioned.

You can find Tom on Twitter @tommyr345

The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.