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Zip Co share price climbs higher on Chemist Warehouse deal: Should you invest?

The Zip Co Ltd (ASX: Z1P) share price has continued its positive run on Tuesday.

In morning trade the payments company’s shares are up 2.5% to $1.22. This has stretched its year to date gain to 12%.

Why is the Zip share price on the rise today?

Investors have responded positively to an announcement out of Zip this morning which reveals that it has formed a partnership with CW Retail Services Pty Ltd, the owner of Chemist Warehouse.

The partnership will see Zip offer its interest-free payments to the customers of Australia’s largest pharmacy retailer within the next few months.

According to the release, Chemist Warehouse customers will have the option to use their Zip account to make interest-free payments when shopping online and in-store across Chemist Warehouse, My Chemist, My Beauty Spot, and ePharmacy.

Zip CEO and managing director, Larry Diamond, said: “We are excited to partner with one of Australia’s top 10 retailers in Chemist Warehouse and expand their digital payment offerings. Zip customers now have the opportunity to pay for every day spend with their interest free digital wallet, enjoying better terms and a better payments experience.”

Should you invest?

Chemist Warehouse currently generates revenue in excess of $5 billion from over 400 locations across the country, so it certainly is a retailer you want to work with.

However, it is worth noting that this partnership is not exclusive and rival Afterpay Touch Group Ltd (ASX: APT) continues to be available to Chemist Warehouse customers. So I don’t think it will be a game changer for Zip, but it certainly is a step in the right direction.

I’ve been very impressed with Zip’s progress and feel it could be worth considering a small investment in the fast-growing company along with Afterpay Touch and ahead of newly-listed SPLITIT Payment Ltd (ASX: SPT).

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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 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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