“We understand that millions of small businesses across the nation are making transactions an interest free option for them would be extremely beneficial,” Mr Gray said.
“We see small businesses being able to offer and accept Zip, we also see small businesses as customers of the Zip product and able to use it for their everyday needs.”
Zip said it will offer an alternative to credit options offered by alternative lenders because its Zip Biz product would act like a line of credit of up to $25,000 that small businesses could repay in instalments interest-free.
The company will join a number of other challenger fintechs focused on small business instalment payments, though key competitors like Afterpay are not playing in the business finance space.
Mr Gray said Zip was also protected from further drops in consumer spending because it was focused on allowing customers to pay for everyday expenses, groceries, as well as the countless transactions that businesses run through their books each day.
“We should be able to continue to grow regardless of economic conditions…with our account concept, it becomes the first choice of customers’ payment, and then we’re their first choice if they are buying groceries or fuel,” he said.
On Thursday, the company also struck a strategic agreement with Amazon Australia. Zip will be available as a payments option on the site and the company will issue an Amazon affiliate with warrants to acquire 14.6 million shares. Zip’s share price jumped 16 per cent on the announcement to $4.04 by lunchtime.
However, the company’s shares dived 12 per cent after its first quarter figures were released last week. Zip showed it had doubled its revenue to $31 million but the earnings margin it achieved on average receivables dropped to one per cent for the quarter, down from 2.2 per cent in the previous period.
Mr Gray said margins decreased “very slightly”, though the business had costs under control. He said Zip was embarking on extra marketing spend to increase its profile.
“In terms of brand recognition [Zip wants] to continue to acquire customers while the window is open,” he said.
Follow MySmallBusiness on Twitter, Facebook and LinkedIn.
Emma is the small business reporter for The Age and Sydney Morning Herald based in Melbourne.