Zip share price surges 8% on QuadPay update

The Zip Co Ltd (ASX: Z1P) share price has surged 8.5% higher in morning trade. This follows a trading update on New York-based BNPL provider Quadpay.

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The Zip Co Ltd (ASX: Z1P) share price has surged 8.5% higher in morning trade. This follows a trading update on New York-based buy now, pay later (BNPL) provider QuadPay.

QuadPay has evolved to become one of the leading platforms in the United States (US), where the local retail market is estimated to be worth US$5 trillion per year.

Zip reported that it had entered into an agreement to acquire the remaining shares in QuadPay back in early June, as the ASX-listed BNPL provider expands on its global strategy. Zip Co has scheduled an EGM meeting to vote on the proposed acquisition of QuadPay on 31 August 2020.

Record month of July for Quadpay

Zip revealed today that QuadPay had ended the month of July with record monthly transaction volumes – higher than US$70 million, which was 30% up on the June quarter average. The monthly transaction volume is also more than 600% higher on a year-on-year basis.

QuadPay added 133,000 new customers during the month, and the company passed the 2 million customer milestone during August. QuadPay also reported to be continuing to achieve impressive high net transaction margins above 2%.

In addition, QuadPay’s enterprise sales pipeline is reportedly still strong going into the US holiday season.

New strategic partnerships and merchant agreements

QuadPay partnered with a number of Internet Retail 1000 merchants during July, such as Fanatics and Mercari. These partnerships are set to generate a combined US$3 billion in online volume. Also, all are on track to be up and running before the busy fourth quarter US holiday period.

A number of successful strategic partnerships were also finalised during July. These include agreements with Fiserv (NASDAQ: FISV). This will see BNPL services rolled out across QuadPay’s US based merchant base, in conjunction with with Fanatics.

QuadPay has also partnered with MasterCard‘s Vyze financing platform. This will enable BNPL services to be provided within the Vyze platform.

Quadpay secures new debt facility

The US BNPL provider also managed to secure a debt facility provided by Goldman Sachs and Oaktree of up to US$200 million. The new credit facility will be used by QuadPay to further expand its BNPL business throughout the US.

Brad Lindenberg, QuadPay Co-CEO, said:

The momentum we are starting to see is a testament to our product and technology capabilities which are being recognized as market leading. QuadPay is the easiest platform for enterprise merchants to integrate with, both online and in-store. With less than 15% of the Internet Retail 1000 offering an interest free BNPL service, we look forward to joining forces with Zip and rapidly accelerating our growth in market.

At the time of writing, the Zip share price was up by 8.5% to be trading at $7.15.

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