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Zip share price surges 20% on eBay partnership

miniature shopping trolley containing ebay business card
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The Zip Co Ltd (ASX: Z1P) share price has soared by 19.53% in morning trade today. At the time of writing, the Zip share price has rocketed to $9.06 after closing yesterday’s session at $7.58 This follows the company’s announcement of a new major partnership with eBay Australia.

New partnership driving Zip share price

The new partnership announced today gives businesses the opportunity to directly access working capital through the eBay Australian marketplace. It also aligns with the official launch today of Zip Business. There are currently 40,000 Australian small and medium-sized businesses (SMBs) that have access to this service.

By being part of the eBay marketplace, merchants will now have access to a flexible line of credit. This can be used to purchase inventory while also covering their short-term expense needs for activities such as marketing campaigns. The new tool also has the ability to help merchants manage their cash flow requirements. This is done through online access to a range of credit options.

Zip has also integrated the Spotcap brand into the Zip Business portfolio, as part of the official launch. The Spotcap business will be combined with Zip Co’s risk decisioning and real-time onboarding capability. This will fast track the scaling of the SMB buy now, pay later (BNPL) offering.

Zip is set to roll-out further products in the coming months as part of the Zip Business launch. These new offerings will support both its SMB network, and its retail and channel partnerships.

New debt funding facility

The Zip share price is surging after the company also announced it has finalised a $100 million debt funding facility arrangement with United States firm, Victory Park Capital Advisors. This debt arrangement will be utilised for the Zip Business receivables. It will provide Zip Co with additional capacity to support the launch of its new business announcement.

Peter Gray, Zip Co founder and Chief Operating Officer, commented:

Zip is extremely excited to formally launch its Zip Business platform to create a suite of products for the small business community, a segment that has been underserved by the traditional lenders in recent years. This comes at a time when Australia’s small businesses are confronting the extreme challenge of COVID-19, which has created enormous pressure on cashflow and ongoing business investment. A thriving small business community is critical to the health of the Australian economy and we are deeply committed to supporting the growth of these important businesses.

The announcement by Zip Co today, follows a trading update two days ago regarding New York-based BNPL provider QuadPay, which Zip has acquired. Zip revealed that QuadPay ended the month of July with record monthly transaction volumes, 30% up on the June quarter average. 

With today’s rise, the Zip share price has increased more than 155% in year-to-date trading. Zip is scheduled to release its FY 2020 results to the market tomorrow.

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Phil Harpur has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of ZIPCOLTD FPO. 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 Scott Phillips.

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