UK-based payday lender Wonga has acquired Rocket Internet’s BillPay, a provider of payment solutions to online retailers in Germany, Austria, Switzerland and the Netherlands, as part of a push to become a “broad-based digital finance group”.
BillPay – which started life in 2009 and is based in Berlin – is led by founder and CEO Nelson Holzner. He and other senior colleagues will stay on following the acquisition. It’s one of the quieter companies in Rocket Internet’s portfolio but significant with about 90 employees, two million end-users and over 3,500 partner merchants, including CBR Group (CECIL and Street One), Runnerspoint, Fahrrad.de, DriveNow and Home24.
For Wonga, which now employs about 600 people and increased profit by 35 per cent to £84.5m last year, the move will speed-up the company’s international expansion and complement its own recently-introduced PayLater product.
Both PayLater and BillPay allow online shops to offer a delayed payment option. Instead of paying directly at checkout, shoppers can choose to allow PayLater or BillPay to pay on their behalf before fronting the cash themselves later in instalment payments. BillPay also offers invoice and direct debit options – important in countries such as Germany with low credit card penetration compared to the US.
“As well as giving Wonga Group a presence in Europe’s second largest online retail market, this deal continues our on-going transformation into a fully-international, digital finance business with operations across three continents and more than three million customers,” Wonga founder and chief executive Errol Damelin said.
The terms of the deals were not disclosed. Pressed for more details during a press call, Damelin pointed out that BillPay currently processes €300m of transactions per year – that’s a “significant business”, he said, and this is a “meaningful transaction”. BillPay had previously raised “millions” in financing from investors.
High-interest short-term lending is under fire by some parties in the UK. On Thursday, Labour leader Ed Miliband proposed a tax on payday lenders to help fund credit unions if his party is elected in 2015. Damelin rejected any suggestion Wonga’s move to expand beyond short-term consumer loans is motivated by public perception. “We’ve been innovating products since we launched”, he said. “It’s really got nothing to do with image.”
The deal follows the launch of Wonga’s consumer loans service in Poland and the purchase of an online short-term consumer credit business in Spain. The company is also now active in Canada and South Africa.
Rocket Internet is the main investor in BillPay, joined by Holtzbrinck Ventures, Zimbo founder Reinhold Zimmermann, AB Kinnevik and a number of individual private investors with links to Rocket Internet, eDarling and Project A.
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