Zip Pay in Australia. How does it work

In recent times there have been a series of new and exciting innovations in the financial world, including the rise of companies offering digital services. These companies often work in a specific financial niche, such as multi currency accounts or “buy now, pay later” schemes.

In this article we’re going to take a look at Zip Pay, a credit solution offered by digital services provider Zip. We’ll explore how and where it works, what the fees are and some of the potential upsides and downsides of using it.

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Who is Zip Co Limited

Zip is an Australian company founded in 2013. It aims to offer customers a flexible and transparent credit solution, as opposed to the more traditional credit card model offered by brick and mortar banks.² For Australian customers they currently offer two products.

• Zip Pay
• Zip Money

For this guide we’re going to focus on Zip Pay rather than Zip Money.

What is Zip Pay in Australia and what are the features?

Keeping it simple, Zip Pay is a bit of a modern take on a credit card. Once you’ve been approved online by Zip for a Zip Pay account, you get access to up to $1000 credit to spend interest free.¹ This money is then repaid to Zip through regular repayments.

How Zip Pay works and who can benefit from it

Zip Pay works through online check outs or the app, which generates single use cards and can be added to yourApple Pay or Google Pay digital wallets.¹

There are benefits to using Zip Pay if you looking for a low limit credit solution.¹

• No fee to open an account and nothing to pay upfront when making a purchase
• Some flexibility on the repayment schedule
• Purchases remain interest free
• There are ways to have the monthly account fee waived
• Instant cashback is available in certain circumstances
• Can be used for BPAY billers and to pay subscription services

What are some cons of using Zip Pay in Australia

On the other end of the scale, here are a few of the downsides to using Zip Pay.

• Credit is limited to $1000
• You won’t know your authorised limit until after the account is opened
• No physical card
• Due to the fees you can end up paying more for items than if you just purchased it outright

Where can you spend/shop on using Zip Pay

Zip Pay can be used pretty much anywhere that supports card payments or has the ‘Pay with Zip’ option at the online checkout.¹

Within Australia and abroad there are thousands of retailers you can buy from that accept Zip Pay. Here’s a snapshot of some of the companies you can shop and spend at, with a complete directory available on the Zip Pay website.³

• Agoda
• BCF
• City Beach
• Forever New
• Menulog
• Myer
• OzSale
• Sheridan
• The Iconic
• Typo

What are the fees for using Zip Pay in Australia

Zip Pay keeps its user fees pretty simple, charging a $9.95 monthly account fee.¹ This fee is waived if you pay your statement closing balance off in full before the due date.

If you’re late on a repayment or use Zip Pay for an overseas purchase there are some additional fees to take into account.

Using Zip Pay for international payments

You can use Zip Pay to make international payments but it will cost you a bit more. There’s a 1% foreign exchange fee and your funds will be converted using the Visa exchange rate at the time of purchase.⁴ If you can afford it, it might work out cheaper to pay for the item outright using a multi-currency account like the one offered by Wise.

Repayments with Zip Pay

With Zip Pay, repayments are automatically taken by direct debit from the payment method you’ve added to your account.¹ This method can be updated in your account at any time. You can also choose whether money is taken weekly, fortnightly or monthly, as long as the minimum repayment is covered. The minimum repayment for each time period is equivalent to $10 per week.

What happens if you pay late?

If you’re late making a Zip Pay repayment a one time fee of $5.00 will be applied.¹ You’ll only be charged this fee again when you’ve caught up on the repayments then missed or been late for another repayment.

What are the requirements to access Zip Pay in Australia

Depending on the country and account type there’s different requirements to sign up for Zip. Here’s the eligibility criteria to open an Australian Zip Pay account.⁵

• Aged 18 years or older
• Be an Australian citizen or Permanent Resident
• Have an online banking account in your name or verified PayPal account
• Good credit history when checked
• Possess a valid Australian drivers licence or Australian passport
• Verifiable email address and mobile phone number

How to use this service to make payments

There are two main ways to make payments with Zip Pay; online or in person.

Online shopping

The easiest way to pay online is by using the “Pay with Zip” option at the check out. If this isn’t available you can follow these steps to use card details instead.

1. Log in to the Zip app
2. Go to the ‘Pay’ tab
3. Generate a single use card and input the details like you would any other card

Depending on the retailer, you may also be able to buy items directly through the ‘Shop’ tab of the Zip app.

Pay in-store

If you want to use Zip Pay to purchase things in-store you can do this using contactless payment machines. To set this up, you’ll need to add Zip Pay to your digital wallet first.

1. Log in to the Zip app
2. Go to the ‘Pay’ tab and select ‘Instore’
3. Add Zip to your Apple Pay or Google Pay wallet

What are the payment limits with Zip Pay

Zip Pay offers a credit limit of between $350 and $1000. The credit limit you’ve been allowed will be confirmed after your account has been approved.¹

Can you increase your limits with Zip Pay?

If your limit is less than the maximum $1000 you may be able to increase it by speaking to Zip Pay.

To have a line of credit that’s more than $1000 you’d need to use Zip Money instead, which allows a limit of up to $5000.¹ Zip Money does have slightly different requirements and fees though, so you’ll need to check which is best for you.

Zip Pay and your credit rating

Zip Pay doesn't mention whether being late or defaulting on a repayment will impact your credit score. It would be best to reach out to them directly to find out if and when they report data that would positively or negatively impact your credit rating.

What to keep in mind with Zip Pay

Before you sign up to a Zip Pay account it’s a good idea to assess your finances and decide whether you need credit available, and if $1000 will be enough for your needs. It may also be wise to decide what you do and don’t want to use Zip Pay for. Setting these boundaries can be helpful in managing your budget and making sure that the repayments are manageable.

Wise Business

The Wise Business account lets you make international transfers in over 40 currencies to 160+ countries. Each transfer has a small upfront fee and is made using the transparent mid-market rate as you’d see on Google.

You also get local account details in 10 major currencies, including AUD.

Find out if Wise can help your business save money today.

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