Zip says Tencent's Afterpay stake validates sector trends

Zip says Tencent’s Afterpay stake validates sector trends

Zip Co co-founder and chief executive Larry Diamond said Tencent’s investment into Afterpay validates the evolution of the buy now, pay later sector.

The Chinese tech giant on Friday paid $300 million for a 5 per cent equity stake in Australian buy now, pay later provider Afterpay.

Mr Diamond spoke at the Macquarie Australia Conference about developments in the BNPL sector. “We think these trends will continue and have been validated – we saw Tencent make an investment into Afterpay.”

“As we talk to financial services [companies] more globally, this phenomenon is really catching the attention of boards right across the world as banks are struggling to innovate in the credit space and [buy now, pay later] products and services have found favour with customers,” Mr Diamond said. “Zip is playing right against this.”

The fintech CEO said the third quarter was strong across all metrics for the business and in the early part of April transaction volume growth was flat to higher.

“We believe it’s because of the defensive nature of the Zip model. We play in many categories that customers were spending in.”

Before lockdown there was hoarding across the grocery sector, Mr Diamond noted. Then, as restrictions took hold, “we’ve seen online drive up massively since lockdown.”