Amazon Inc's Australia unit has signed up Zip Co Ltd to offer its buy now, ...
) to offer its buy now, pay later service on the U.S. giant’s local retail website, sending shares in Zip soaring by more than 20%.
As part of the deal, Zip will issue warrants to an affiliate of Amazon for it to buy as much as 14.6 million of its shares, representing around 4.2% of outstanding shares. The warrants may be exercised for seven years from the issue date. Installment-based payment options have become very popular, especially with Millennial and Gen Z shoppers, because they bypass the interest rates and many regulations associated with taking out a credit card. BNPL companies make money from vendor payments and penalty payments when shoppers are late paying back a loan.
However, the success of the BNPL sector has also brought greater regulatory scrutiny. Last month, the Reserve Bank of Australia said it planned to dig deeper into the sector next year.
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