Zip Pay: What is Zip Pay and How Does it Work?

Zip Pay is one of several buy now, pay later (BNPL) services in Australia. Over 2,000,000 Australians used a buy now, pay later service in 2019. Zip Pay was founded in 2013 and is based in Sydney, Australia.

Afterpay is the biggest player in the buy now, pay later space in Australia, with Zip Pay coming in second. Afterpay is nearly ten times bigger than Zip Pay when considering their stock prices, but Zip Pay is growing fast.

I’m going to explore what Zip Pay is, how it works, where you can use it, and whether or not you should use it and more.

What is Zip Pay?

Zip Pay is a payment service that lets you receive your purchase now and pay it over an interest-free payment schedule. To make a purchase with Zip Pay, select pay later with Zip Pay at checkout. Returning customers only need to confirm the order to complete the purchase.

Zip Pay offers three different credit limits: $350, $500 and $1,000. Their algorithm will automatically decide which limit you will be eligible for based on the information you provide during the signup process.

You may be deemed ineligible for a Zip Pay account, or be given a reduced credit limit depending on your financial circumstances and credit history.

The signup process only takes a few minutes, if you are approved, you will be able to make purchases instantly and pay for it later. Your application could take a bit longer if they need more information.

Can I Get a Credit Limit Increase?

Customers with an “awesome” history of account activity and successful repayments may be eligible to request an account limit increase. You can simply head to ‘Account Limit Increase’ in the top menu in your wallet to find out if you are eligible to apply for an increase.

How Zip Pay Works

You can use Zip Pay to make purchases either in-store or online. If you’re shopping in-store, you will need to open the app and select the shop in-store option from the menu at the bottom of your screen. You can either share a 6-digit code with the cashier or allow the retailer to scan the bar-code (which is probably easier). You will get a confirmation once the cashier completes the order.

If you are shopping online, simply select Zip Pay as your payment option during checkout.

Zip Pay Fees

You will have to pay a monthly servicing fee of $6 when you have an outstanding balance at the beginning of the month. 

This fee is not charged until the end of the month after the month that you made the purchase. For example, if you bought something on June 15th, your monthly fee wouldn’t be charged until the end of July for that purchase.

Basically, you have until the end of the month after you make the purchase to pay it off in full without paying any service fees.

When you have a $0 balance, your account will stay active without fees until you make another purchase with Zip Pay.

Zip Pay has a minimum monthly repayment of $40 on outstanding balances. You will also have to pay a $5 late fee if you cannot afford to pay the minimum $40 (or your outstanding balance if less) by the end of the month.

You can make additional payments if you want to pay off your debt faster. But you must still pay the minimum $40 minimum on outstanding balances in the months ahead.

How to Signup for Zip Pay

You must meet the following requirements to be eligible for a ZipPay account:

  • Be at least 18 years old
  • Be an Australian citizen or Permanent Resident
  • Have a verified Facebook, PayPal or LinkedIn account in your own name.
  • Have a good credit history
  • Have your own valid and verifiable email address and mobile number

If you meet these requirements, you can signup through their website. ZipPay only requires you to provide some personal information, verify your mobile phone, and connect to either a Facebook, Paypal or LinkedIn account in your own name.

Where Can Zip Pay Be Used?

Zip Pay can be used in-store or online if the merchant or retailer offers Zip Pay as a payment option. You can find a full list of participating retailers on their site. Some of the big names include, Kmart, BigW, Bunnings Warehouse, and Target.

You can use Zip Pay for more than simply making purchases at participating retailers, you can also buy gift cards for a wide range of stores. Some of these stores include Woolworths, Coles, JB Hi-Fi, Uber Eats, and eBay.

Should You Use Zip Pay?

While Zip Pay is a great way to buy things and pay for them later without interest—it’s still borrowing money. You will likely miss a payment at some point and be forced to pay fees.

It might just be better to pay cash for any purchases. Either way, here is a summary of the pros and cons of using Zip Pay:


  • The application process is quick and easy
  • It provides an interest-free line of credit
  • You can increase your credit limit if you have a good credit history with Zip Pay
  • Accepted at thousands of stores in Australia


  • Zip Pay isn’t accepted everywhere
  • You have to link a social media or Paypal account as part of the signup process
  • Minimum $40/monthly repayments on outstanding balances
  • Fees for late repayment

While Zip Pay allows you to make purchases that you can’t afford right now, the interest payments could come back to bite you later.

It’s best to just pay cash if you can, but Zip Pay is always an option if you prefer to pay off purchases over time.

Zip Pay FAQs

Is Zip Pay Safe?

Zip Pay mains a PCI DSS Level 1 certification.  Their ongoing compliance with the Payment Card Industry Data Security Standard (PCI DSS) ensures they protect your cardholder information.

How Do I Avoid Fees?

You must meet your monthly minimum payments of $40/month within 60 days of your purchase.