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Zip Co Ltd (ASX:Z1P) shares jump higher after announcing a partnership with Target

The Zip Co Ltd (ASX: Z1P) share price has certainly had a strong start to the day.

In early trade the buy now pay later company’s shares have jumped 6% to $1.09.

Why are Zip Co’s shares on the rise today?

This morning Zip Co announced a partnership with Wesfarmers Ltd (ASX: WES) subsidiary Target Australia to offer Zip interest-free payments to its customers.

According to the release, Zip will provide its service in 303 Target stores across Australia and also through its online store.

Zip Co’s CEO and managing director Larry Diamond appears to be very pleased with the partnership.

He stated: “We are delighted to partner with a truly significant and quintessentially Australian brand in Target and are proud to be their first in-store alternative payments offering. We believe Zip will be a great fit for Target, providing their customers with a better way to pay.”

The arrangement with Target is part of Zip Co’s strategy of partnering with Australia’s largest retailers, providing consumers with choice while expanding the network of acceptance for Zip’s growing customer base.

The company expects the Zip platform to be live throughout the Target network by mid-October.

Interestingly, this follows media reports that fellow Wesfarmers subsidiary Kmart is going to announce a partnership with rival Afterpay Touch Group Ltd (ASX: APT) next week.

According to the Daily Mail, a Kmart spokesperson has told the news outlet that it will be making a formal announcement about its partnership with Afterpay early next week. It confirmed that customers will soon have the option to use Afterpay for online purchases.

Should you invest in Zip and Afterpay?

I think both companies could have very bright futures ahead of them. However, they are reasonably high-risk investment options so would be unsuitable for many investors.

My preference remains Afterpay Touch due to its international expansion, but Zip Co could be worth a closer look as well if your risk profile allows.

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Wesfarmers Limited. The Motley Fool Australia owns shares of AFTERPAY T FPO. 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 Scott Phillips.

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