ZoodPay, the biggest e-lending platform for eCommerce in Asia and the Middle East acquired Pakistan-based Tez Financial Services on May 26, 2022 with the goal of serving Pakistanis who have limited access to credit. A Switzerland-based Buy Now Pay Later (BNPL) service, ZoodPay has paved the way for Pakistan’s first mergers and acquisitions deal in the country’s young fintech industry. The financial details of the acquisition were not undisclosed.
Founded by Naureen Hyat and Humza Hussain in 2016, Tez Financial Services provides nano-loans to Pakistanis in locations that are underbanked or unbanked. Operating in 160 cities, it is backed by stalwarts such as Planet N, Accion, and Flourish Ventures (Omidyar Network). In 2018, Tez became the first Pakistani fintech to be granted a Non-Bank Financial Company license. Not only has the fintech platform raised $1.1 million so far with the help of Zain Ventures, Sturgeon Capital, and French Partners, it also won $100,000 in 2019 in the Visa Everywhere Initiative for Women competition.
On the other hand, Zoodpay is presently active in Jordan, Iraq, Lebanon, Uzbekistan, and Kazakhstan. It has raised close to $50 million from the same investors who invested in Tez. According to the co-founders of Tez, they started the organization to offer access to financial services through the customers’ phones. They claim that Tez is “Pakistan’s first digital financial institution,” offering tools to users for making short-term investments and getting discounted deals on shopping websites. Thrilled with the acquisition, they’re ready to take the business forward to the next level. In their words:
“We started Tez with an ambition to make access to finance for the masses as easy as access to a mobile phone. We are humbled and thrilled by the confidence shown in our business model by larger regional players and look forward to the next level of development for Tez where our learnings in crafting the digital lending journey and managing risk can serve as a foundation for delivering consumer-centric lending solutions at scale, while creating credit histories for the masses.”
In March 2022, ZoodPay announced its merger with Network International to offer BNPL services. The collaboration between ZoodPay and Tez will let thousands of Pakistani partners list their products and enable consumers to pay for them in installments. Tez allows personal loans upto $50 to its users, charging them a one-time fixed fee for the loan. The fee ranges between 10-20% depending on the customer’s credit score and loan amount. ZoodPay, on the other hand, also offers users the choice of using its own marketplace, ZoodMall.
According to ZoodPay’s CEO Michael Khoi, their lending strategy is impacted by three elements of the digital infrastructure. They are, in their words, “acquisition of consumers and merchants via its diverse distribution channels including its own e-commerce marketplace and network of retailers and partners, deriving rich transactional data from its internal universe of fintech, e-commerce marketplace and logistics, and leveraging its proprietary credit scoring algorithms to assess credit risk and extend credit to both consumers and merchants.”
In fact, Khoi strongly believes that Pakistan is an emerging fintech market filled with potential as the number of people who seek credit increases by ten folds annually. He’s certain that by merging ZoodPay’s advanced ecosystem and Tez’s local know-how, he’ll be able to empower Pakistanis by offering them access to cheap, convenient, and reliable digital financing services.
The chairman of Tez, Nadeem Hussain, agrees: ““The Pakistani startup ecosystem has hit its inflection point. In addition to sizable fundraises, acquisitions of local players by international players are starting to take place. This further validates the global value Pakistani startups are creating. Planet N was one of the first in the market to invest in startups. We are now seeing the first-mover advantage.”
With 11 offices worldwide, ZoodPay uses AI and systems intelligence to provide flexible payment offerings to businesses across MENA. At a time when less than 5% of the Pakistani population uses formal credit, ZoodPay intends to address this problem with its unique B2B and B2C digital lending system. Its future roadmap includes providing a distinctive set of loan solutions for SMEs and their clients, supported by flexible payment methods, effective logistical control, and a large distribution network of partners and retailers.
Eventually, ZoodPay’s founders hope to grow the business at a pace of 30% month over month in 2022. They also plan to introduce the Virtual Installment Card. With this merger, ZoodPay will be emphasizing on credit risk, balanced size, and prudent expansion.