Even though the Buy Now Pay Later (BNPL) segment is in its nascent stage in India, it has been growing at a rapid pace, as the pandemic has led to a shortage of cash for many individuals. This has been beneficial for BNPL startups like ZestMoney, which has raised $50 million as part of its Series C financing round from Australian BNPL startup Zip Co Ltd, which will be acquiring a minority stake in ZestMoney.

The round marked the Australian firm’s entry into the Indian market. The eight-year-old Zip has a footprint in 12 markets across five continents and serves more than 7.3 million customers and over 51,000 merchants.

Backed by Goldman Sachs, Quona Capital, Xiaomi, and Alteria Capital, and others, ZestMoney has raised over $100 million to date and said that the financing round has not been closed yet, since its existing investors will be participating in it as well. The proceeds from the funding round will be utilized towards expanding ZestMoney’s product suite, deepening the merchant network, strengthening its balance sheet, and launching new business lines in insurance and savings.

The six-year-old Indian start-up, founded by Priya Sharma, Ashish Anantharaman, and Lizzie Chapman, uses artificial intelligence (AI) and machine learning (ML) to onboard customers. It has partnerships with 25 banks and non-banking lenders for BNPL solutions and provides credit information, financial counseling, and options to help users build a good credit history. Its offerings range from ₹50 to $6,777, while the duration of the payback period ranges between a month to two years. It has a customer base of 11 million, 70% of whom are from Tier II and III markets and are first-time credit seekers, along with 75,000 physical stores and more than 10,000 online sites, and works with prominent names such as, Flipkart, Google Pay, Apple, and Xiaomi.

“We believe India — along with many other emerging markets — will leapfrog traditional products like credit cards, going straight to digital payment solutions. Over the last year, we have seen applications for BNPL go up by 5X on our platform,” Chapman said. “We continue to invest in deepening partnerships with our merchant network and hiring the best talent. We strongly believe India will emerge as the largest BNPL market in the world over the next five years.”

Additionally, ZestMoney has recently secured the corporate agent license from the Insurance Regulatory and Development Authority of India (IRDAI) allowing it to offer and enable insurance products to users on its platform.

Considering the fact that credit cards continue to remain beyond the reach of a majority of India’s population, driving them towards a vicious circle, the necessity of the BNPL has risen now more than ever.