ZestMoney, a Bangalore-based buy now, pay later platform, said on Wednesday it has raised $50 million in a new financing round from Australia’s Zip as the Indian firm looks to double down on a trend that has shown early signs of traction in several global markets.
The eight-year-old Australian firm, which has a presence in 12 markets across five continents, is acquiring a minority stake in ZestMoney as part of the new Series C financing round, the two said.
ZestMoney said in a statement the new financing round hasn’t closed as existing investors will be participating in it as well. The startup, which has raised over $110 million to date, counts Goldman Sachs, Quona Capital, PayU and Xiaomi among its early backers.
The buy now, pay later market remains at a nascent stage in India, where only a fraction of the population has a credit card. But a handful of startups including ZestMoney, Capital Float and LazyPay are beginning to show traction in a market largely dominated by traditional giant Bajaj Finance.
The low penetration of credit cards in India has meant that very few people in the nation have a traditional credit score that banks heavily rely on to establish one’s creditworthiness before issuing them a loan. Moreover, small loans don’t generate lucrative returns for banks, giving them less incentive to write such cheques.