Digital Bank Zopa Acquires BNPL Firm DivideBuy

British neobank Zopa has found its first-ever acquisition in buy now, pay later firm DivideBuy.

The deal, announced Thursday (Feb. 16) comes two weeks after Zopa raised $93 million that the company said would allow it to pursue mergers and acquisitions. It’s also happening as the U.K. prepares to regulate the buy now, pay later (BNPL) industry.

“This acquisition helps us bring to life BNPL 2.0, an evolution of BNPL which we believe delivers the easy, integrated product which customers love whilst also addressing some of the issues around affordability and responsible lending which have plagued the sector,” Zopa CEO Jaidev Janardana said in a news release provided to PYMNTS.

According to the release, the acquisition will let customers finance larger purchases — 250 pounds to 30,000 pounds — that would otherwise take months or years to save up for. Zopa says its BNPL lending will only offer affordable credit by “running credit checks and affordability assessments for all customers.”

Affordability is one of the drivers behind the U.K.’s move to regulate the BNPL sector. As PYMNTS reported earlier this week, the country’s proposed rules follow years of rapid growth in BNPL use in the U.K.

Official data from the country’s Financial Conduct Authority (FCA) show the use of installment tools nearly quadrupled to hit 2.7 billion pounds (or about $3.6 billion) in transactions in 2020.

In the years since, unregulated BNPL loans have grown in popularity as consumers embrace buy now, pay later to avoid credit card debt.

Following England’s cost-of-living crisis, the product proved especially popular with public sector workers who are trying to survive pay cuts, offering Brits a lifeline as consumer sentiment in Europe plummeted amid skyrocketing inflation.

That’s led regulators to take measures to protect consumers and minimize abusive practices among BNPL providers.

For example, the FCA warned companies last summer against publishing misleading ads, asking them to make sure that “consumers, particularly those in vulnerable circumstances, are equipped with the right information at the right time, so they can make effective, timely and properly informed decisions.”

Some industry executives have said in conversations with PYMNTS that they welcomed the proposed rules, including Zopa’s Janardana. Interviewed here last year, he said the affordability checks his company conducts are in line with the FCA’s proposal.

With that option, he said, “we help solve the customer need, which is about compartmentalization of purchasing and paying down of debt, but at the same time, it doesn’t have some of the negative aspects that current versions of BNPL have.”

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