Good morning, ladies and gentlemen. Welcome to the annual general meeting of Zip Co Limited. My name is Philip Crutchfield, and I'm the Chair of the company, and I'll be chairing the meeting today. It's now 10:00 A.M., and there being a quorum present, I declare the meeting open for business, and I confirm that the meeting has been properly constituted. Given current restrictions and social distancing practices in place, we are unfortunately unable to meet with you in person today. But I would like to thank those shareholders that are joining via the virtual meeting platform. This allows shareholders, proxies, and guests to attend the meeting virtually. All attendees can hear a live broadcast of the meeting. In addition, shareholders and proxies have the ability to ask questions and submit votes virtually.
In opening the meeting, I'd like to introduce my fellow board members and management team of Zip Co Limited, who are attending via the virtual platform, but indeed, in the case of all of them, in person. Mr. Larry Diamond, on my left, Mr. Peter Gray, on my right, Mr. John Batistich, Non-Executive Director, Ms. Pippa Downes, Non-Executive Director, Martin Brooke, the Chief Financial Officer, and Tommy Mermelstein, the Chief Strategy Officer. Also in attendance is our company's secretary, Mr. Franks, Mr. David Squires, a representative from Computershare Investor Services, and our auditor, Mark Lumsden and Nihal Miranda of Deloitte. There are no apologies of which I've been notified for this meeting. The agenda for today's meeting is as follows: I will provide a chair's address.
I'll then hand over to Larry Diamond, who will provide a Managing Director/Chief Executive Officer's address. We will then go through the formal resolutions included within the notice of meeting, including conducting a poll on all resolutions. Following the formal part of the meeting, we will close the meeting, and finally, the results of the poll will be released to the ASX following the close of the meeting, once determined. I note that only registered shareholders will be able to enter questions into the online question portal. Questions can be submitted at any time on the virtual platform. To ask a question, press on the speech bubble icon. This will open a new screen. At the bottom of that screen, there is a section for you to type your question. Once you've finished typing, please hit the arrow symbol to send your question.
Please note that while you can submit questions from now on, I will not address them until the relevant time in the meeting. Please also note that your questions may be moderated, or if we receive multiple questions on one topic, amalgamated together. Finally, due to time constraints, we'll need to monitor time to answer all your questions during the meeting. I'll now attend to my address. As many of you will know, Zip listed on the ASX in September 2015, with the aim of disrupting the antiquated and opaque credit card market. The company has undoubtedly been successful in that objective, and Buy Now, Pay Later, as they're called, solutions are clearly having an impact.
Today, Zip has in excess of 4.8 million customers, over 500 employees, more than $5 billion in annualized transaction volumes across four markets, and is well on its way to becoming a major player and innovator in the fast-changing global payments landscape. However, we believe we're just getting started. The opportunity in a global context is immense, and Zip is well placed to continue on the ambitious agenda that co-founders Larry and Pete commenced some seven years ago. All over the world, the biggest shift in consumer finance since credit cards were introduced more than half a century ago is underway. Digital wallets, such as those from Zip, are providing customers with the autonomy to access credit and spread the cost of specific purchases via interest-free installments on their own terms.
People can do this seamlessly through a digital experience at checkout, both online and in store. A cumbersome sign-up process, crushing interest, the need to visit a physical bank branch or waste half a morning on a bank helpline as part of a credit card application. Customers can now access fairer, more transparent, and friendly products, such as those offered by Zip, that don't rely on hidden fees or debt traps or customers being late to make the economics work. We firmly believe that new forms of payments that provide simple, transparent, and fair alternatives will continue their phenomenal growth. From day one, Zip's founders made a decision that growth at all costs would not be pursued. Credit would be provided responsibly and only after proper due diligence on those wanting access to Zip services.
This focus on responsibility is at the core of the business and is the reason why every new customer undergoes a credit and ID check, and why account limits are tailored to a customer's specific circumstances. This focus on upfront due diligence and responsibility is evident in the customer outcomes that Zip consistently delivers. For example, less than one Zip customer in a hundred is late with a payment each month. Compare that with one out of six for credit cards and other Buy Now, Pay Later offerings. Our purpose is the freedom to own it, and we own the responsibilities that come from issuing microcredit in real time. The uncertainty of life revealed itself with all its force this year, with the onset of a global pandemic, threw the world into lockdown, convulsed the health of millions, and upended world economies.
Our hearts go out to all of those people who have lost loved ones or been otherwise affected by this continuing pandemic, and we thank all of the incredible health workers for their services and for keeping us safe. We should cherish our world-leading doctors, nurses, and healthcare providers that we have in Australia. We also commend government for quick responses, protecting citizens, and providing timely and essential financial support to affected workers and businesses. Some eight months on from the onset of the pandemic in Australia, and it is clear that the Zip business model stood tall, with continued growth in transaction volume, strong revenue, and market-leading credit performance.
This resilience during COVID can be explained not only by Zip's robust business model that embodies flexibility, transparency, and fairness, but also the fast-forwarding of the global move to online shopping, the continued aversion towards traditional credit products, and the global uptake of digital payment solutions. While we saw a small spike in customer hardship requests in March and April, at year-end, that is 30 June, Zip had only 1,000 of our about 2.1 million customers in hardship. This figure is now at less than pre-COVID levels. It would be remiss of me not to publicly thank Westpac's nominee to our board, Di Challenor, for her service to Zip. I and my co-directors have forged a lifelong friendship with Di, and we thank her for her wise counsel and advice, and we wish her well.
Ladies and gentlemen, you will notice a new face among our directors today. It is my pleasure to welcome Pippa Downes to her first Zip AGM. Pippa is an experienced listed company director who will be a tremendous asset to Zip's board and governance, especially as the company executes on its global expansion strategy. Pippa has had a successful banking and finance career of more than twenty years, and her experience and advice will be of immense benefit to the management and also to the board. I thank my other co -non-executive director, John Batistich, for his energy and numerous contributions to the company, and for chairing our Audit and Risk Committee and Remuneration and Nominations Committee. We also continue to look at expanding our board with a focus on diversity and the global nature of our business.
I also thank and congratulate Larry and Pete, the Zip management team, and all the remarkable Zipsters all over the world. Together, you are building an extraordinary global payments while importantly retaining the essential ingredients that make Zip such a joyful place to work. Some comments about global expansion. While we pushed through COVID, the pandemic did temporarily delay our global expansion plans. During the early days of the pandemic, with unprecedented uncertainty, we made the decisions to scale back some of our expansion plans and delayed our U.K. launch. It was in June this year that Zip announced the acquisition of QuadPay, a leading U.S. Buy Now, Pay Later company that provides Zip access to the world's largest retail market, which at $5 trillion a year, is 15 times larger than the Australian retail sector.
QuadPay, founded by Australian tech pioneers, Brad Lindenberg and Adam Ezra, has similar technology to Zip, and more importantly, an aligned culture based on moving fast, innovation, and an identical commitment to responsibility. As our market updates show, and as Larry will elaborate upon, the U.S. business is growing extremely quickly. With 2.5 million customers, over $2 billion in annualized volume, and 15,000 daily downloads, they are leading the way in payments innovation. We are very optimistic about the growth in the U.S. and the experienced team and partners we have in place. I can also report today that Zip is officially launching in the United Kingdom. We are live with over 150 merchants, and we'll be bringing on global fashion and apparel brands, JD Sports, Boohoo, Fanatics, and Fashion Nova, as we scale in the region.
As one of only a few truly global Buy Now, Pay Later players, Zip has a unique and huge opportunity in this region. We've also extended our BNPL offering to small and medium-sized enterprises. We see that as a natural evolution. Small businesses have the same needs, specifically the ability to easily spread the costs of a purchase over time on fair and transparent terms. The pilot we recently completed validated the market opportunity and provided key learnings that flowed through to our product development. The strategic acquisition of Spotcap in September 2019 delivered a proven SME credit decisioning platform that will enable us to rapidly scale Zip Business. Further, we've recently launched our own a new BNPL product for SMEs, where small businesses can access interest-free installments to manage their cash flow, leveraging the deep network Zip has already built with its major trading partners.
Something about Pocketbook. The need for customers to understand their spending and saving is ever more present, given the uncertainty that has arisen from COVID. We're continuing to invest in the Pocketbook app, which is one of Australia's leading personal finance apps. In the coming weeks, we will enable customers to link hundreds more bank accounts to give our 800,000 users a more complete view of their finances. We are also looking forward to the continued evolution of the customer data rights and open banking, as they will enable us to continue to deliver innovative features to the app. I want to say something about people and culture. As our presence has grown into new markets, so has our headcount. Globally, there are now 535 people at Zip.
As our focus on product and technology continues, so too has our investment in these functions, which now make up well over 30% of our global workforce. To name just a few of the initiatives our Chief People Officer, Anna Buber-Farovich, and her team are working on, they include scaling our global culture and performance through our values of customer first, own it, stronger together, and change the game, and embedding those values into the everyday life of the group, building leadership through a newly formed extended leadership team, and the rollout of global manager development training to help build world-class leadership, and investing heavily in corporate social responsibility and diversity and inclusion, with the appointment of two key new hires to drive our strategy and execution in these extremely important areas.
All of these projects and initiatives are furthering our goal of building a global company with enviable values and enabling the fast-moving, innovative culture that is Zip. I want to say something about the ASIC report. On the regulatory front, ASIC this month released its report, 672, on the Australian Buy Now, Pay Later sector. The report confirms what we've known for a long time, which is that millions of mainstream Australians are shifting away from the broken credit card model towards interest-free alternatives, where balances are repaid in weeks or months, not years. As the ASIC report also confirms, there are different Buy Now, Pay Later providers in Australia with very different business models and very different ways of engaging with customers. The report also confirms that Zip makes less than 1% of its revenue from late fees.
That's among the lowest of all Buy Now, Pay Later providers. Zip does not rely on consumers falling behind to drive its economics. Our sector is developing a self-regulatory industry code of practice, which will establish minimum standards for the industry. However, while we believe the code is a good start, Zip will continue to implement its own higher standards, particularly around customer suitability for responsible access to Zip's products. We believe the continued growth of the segment will inevitably lead to increased focus from legislators and regulators around the world. This is as it should be. Zip supports further and fit for purpose regulation of players in the industry.
In closing, financial year twenty twenty was another watershed year for Zip, as we made specific moves to deliver on our global, global ambitions, expanded our offerings to small businesses, and executed our plan against a backdrop of significant uncertainty. The first half of this year has continued this positive momentum, and we consider we are exceptionally well placed to accelerate growth and capitalize on the opportunity to be a Buy Now, Pay Later world leader. Thank you again for your interest in the affairs of the company. I'll now hand over to Larry to provide his Managing Director's, CEO's update. Thanks, Larry.
Thanks, Philip, and welcome to Zip Co's 2020 AGM. I'd firstly like to thank all our shareholders out there for their support over the year. We'd like to thank our retailers who have really underpinned our model. We'd like to thank our customers, and of course, we'd like to thank our staff for a really strong year. As Philip mentioned, even though we are five years into life as a listed company, it genuinely feels like we are only getting started. Next slide. As Philip touched on, Zip's purpose is the freedom to own it. We give customers the freedom to own the experience, own the couch, own their financial well-being. We give merchants the freedom to own their growth.
As a financial services player, we own the responsibilities that come from this role, and we give our Zipsters the freedom to own it inside Zip, and our mission to be the first payment choice everywhere and every day, and we've seen some really great strides just in this last half at trying to achieve that mission, so today I'm going to cover a little bit of a brief overview about the company for those new to the story. We'll talk about the results update on slide three, and we'll talk about the strategic priorities that we set at the beginning of financial 2021, so over to slide five. The next one. Thanks, so just a quick refresher.
You know, Zip is one of very few truly global Buy Now, Pay Later companies, and this is a big, big point of differentiation and, and, and advantage. We're currently in five markets, Australia, New Zealand, U.K., the U.S., and we have a strategic interest in South Africa. The business today is doing actually over AUD 5 billion in underlying annualized transaction volume, which is a great result, and over AUD 300 million in annualized revenue. And in the last twelve months, the big step change for us was the acquisition of QuadPay, where we consolidated our interest. We had a strategic interest, and it's really helped us become a truly global player with a strong U.S. base. And we'll talk about some of these numbers a bit, a bit later on.
On the next slide, Zip really is building a digital ecosystem. So we are trying to connect customers with retailers or merchants through a fair and valuable payments experience. And we really like the space where we play because it is truly a win, win, win. It's a win for the customer, it's a win for the merchant, and of course, it's a win for our financial model. For customers, we provide customers the ability to pay over time, interest-free. We've built a very powerful and engaged mobile app, and we'll talk about that later being the centerpiece of that relationship. We allow customers to pay bills, to budget, and deliver the offers and content from our merchant partners. For merchants, it's a win. We help them convert browsers into paid customers.
We deliver new customers to our merchants, and we drive conversion through the checkout. We've also announced more tools to offer small business, particularly new Buy Now, Pay Later. Our objective really here is to own more of the transaction commerce that happens between these two peers and become incredibly important to both sides of the equation. On the next slide, as we spoke about in our purpose, the freedom to own it, we own the responsibilities that come with issuing microcredit in real time. As Philip touched on, since inception, we've done identity and credit checks on all applicants. We also pull bank transactional data in real time, and using our Pocketbook engine, we categorize that bank data in microseconds and use it for our financial underwriting.
We have a model that derives income from customers and merchants and doesn't rely on late fees. We've been investing significantly over the last seven years in, you know, Australia's leading proprietary decision tech, which allows us to underwrite customers in microseconds, looking at conventional credit data, but also unconventional credit data. What began as a rules-based engine is now full machine learning models, where we have a wonderful mix of credit underwriters and data scientists that have built this model. The proof's in the pudding. You know, the average Zip credit score is higher than a Big Four bank credit card applicant. One in a hundred customers are late in any given month, and again, we contrast that with the broken credit card and some of the other pay later companies.
Our arrears is now less than 1%. On the next slide, you know, our hearts do go out to a lot of the pain that we've seen across the industry as a result of COVID. You know, both consumers, businesses. The Zip model has held up very, very well. I think what we've seen at the outset of COVID in early March, continued growth in consumption, strength in our credit performance, and an ability for Zip to adapt very, very quickly. Our exposure to online has certainly benefited from customers at home shopping in their living room, and close to 85% of our transactions tend to happen online, not in store.
We are a credit card disruptor, so we have great exposure to many categories, such as the home, electronics. You know, Bunnings is a major retailer, and that has held us in very good stead. We also have good exposure to the everyday, grocery, fuel, and purchase decisions are part of the customer's every day. So that's held up very, very well. Due to our credit underwriting and investment there, we've actually seen our arrears rates drop below 1% for the first time in quite a few years, and in fact, cash repayments from customers are higher than they were pre-COVID, so we've seen customers become net savers. The government stimulus has also helped many Australians out there.
And, pleasingly, on the small business front, it's a big focus of ours, and we'll touch on it a bit later, but, you know, Zip is really about helping small business, and we were able to fast-track a Buy Now, Pay Later solution for small business, and we were also able to access the government guarantee, which is helping our future growth. And the DNA of the organization, as we always talk about, you know, one of our prime endures is Zip's resilience to change, and very quickly, we were able to adapt to remote working. Many of our teams actually do this already, and obviously trying to retain the culture during this decentralized operating environment, and we've done a really great job there.
And finally, before we go into the results on the next slide, we are Zip. We have to move fast. It's all in the name. We have to execute on our mission and constantly innovate. And pleasingly, what we actually saw just in this last quarter, even though we were remote working, is as you've seen there by Julian Potter, who's the country manager for Visa, Zip was able to deliver issuing virtual cards in the Apple Pay and Google Pay wallet, the fastest of any implementation that they have done to date. So I think a remarkable achievement to deliver the speed, the growth in our staff, and to innovate all during these unique circumstances.
So moving on to the business update, what we've seen is really a transformational year for Zip, just on the next slide. Globally, we've now become a true global player. We saw continued growth in Australia, customer numbers growing, merchant numbers growing. The U.S. is scaling incredibly well, and we've just announced the launch in the U.K., and we now have close to 5 million customers and run rate over AUD 5 billion in annual transaction volume. We have also maintained really strong unit economics. In Australia, our gross profit margins are around 50%, and in the U.S., on the Pay in 4 product, we are able to deliver net transaction margins of around 2%. So really strong unit economics, which is critical as we invest for growth globally.
We've also seen the app continue to be a source of strength for the business, and we've now had more than five million apps downloaded globally. We launched Tap & Zip, which was a really unique and pioneering initiative over here in Australia to unlock everyday spend, and we'll talk about that. And we launched Zip Business, which is going to become a huge tribe inside Zip and able to bring on eBay to help strengthen our network. Just on the next slide. So FY 2020 was a great year. We've shown these figures on a pro forma basis, and as you can see, transaction volume, transactions, revenue, all up well over 100%. This is providing really great momentum into financial year 2021.
You know, this is both the Australian business as well as the U.S. business, including New Zealand as well. In this coming financial year, we'll also see the results from the U.K. If you look on the next slide, this growth is really part of Zip. We are a growth business. We invest for growth, and as you can see there, between just FY 2017 and FY 2020, again, well over 100% CAGR on all our key metrics, transaction volume, revenue, and transactions. So a really strong result and continued growth. We also announced earlier last week the October year-to-date update, which saw, again, the business continue to accelerate.
If you just look at the last few months of the year to date, annualizing over AUD 4 billion, we did a AUD 100 million in revenue, which is a great result over the period. We did AUD 400 million in TTV over in the October month. And just this month, we're obviously coming towards the end of the month with Black Friday and Cyber Monday, and again, we're expecting another record month for Zip across all geographies. So very exciting. Now, moving on to our strategic priorities. We set out at the beginning of FY 2021 with four key initiatives to focus on for the year.
We spoke about payments acceptance, we spoke about app engagement, global expansion, and Zip business. And for the rest of the presentation, I'll go into these. The first one was about payments acceptance. Our mission is to be the first payment choice everywhere and every day. We have to get Zip accepted into as many places as possible. And also in-store is a big focus for us because clearly, even though we have a huge weighting towards online, 90% of transactions happen in the physical world. The second pillar was around app engagement. We have to continue to invest to ensure we have Australia's leading financial app, because that's where customers go, that's where we build deep connection with our customers.
The global story, we're continuing to invest globally, and we'll talk about that. And the fourth one being Zip Business and helping small business really grow post-COVID. So as we drill down now into payments acceptance, we'll do a quick status update on how we're going. So just on the next slide. Pleasingly, in this half, we've been able to become a principal issuer with Visa on the scheme, and we launched Tap & Zip, which is really a pioneering solution for Buy Now, Pay Later, where Zip customers can tap with their phone anywhere Visa is accepted by adding the Zip virtual card into a Google Pay or Apple Pay wallet. As we mentioned, it was one of the fastest deliveries that Visa has ever seen.
We had quite a number of squads working on this, and this is really imagining in-store. When we surveyed our customers, many of them said, "Well, the reason we aren't using Zip today is because we can't use Zip in the grocery store, we can't use Zip to pay for fuel." So this really is delivered on the everywhere strategy as well as the everyday strategy by unlocking everyday spend. I'll talk about some of the interesting numbers that we're seeing already with these initial adopters. Moving on to the next slide. We've also increased our global network and merchant acceptance network across all regions. We've seen 74% growth in our merchants, and we now have over 36,000 merchants that can accept Zip customers.
In Australia, we've brought on great brands such as North Face, Speedos, and Puma. New Zealand has been doing fantastically well. They've brought on Auckland Transport, showing that Buy Now, Pay Later can enter many categories, as well as leveraging some of our relationships we have in Australia with Dick Smith and Kogan. I'll leave the U.K. for a bit later, and the U.S. has also done a great job. We'll go into the U.S. business very, very shortly. So that was the first pillar, which was all about acceptance, and we're doing a great job there. The next pillar was all around app engagement, and on the next slide, you can see that our apps are loved by customers globally.
We've had 5.2 million downloads globally, and pleasingly, close to 2 million monthly active users, which is really the key metric. How many customers are logging into the app every month and using it to make a purchase, make a repayment, pay a bill, access the jobs to be done? Really strong ratings on the app stores for Apple and Google. And again, we've seen more growth in transactions, so customers are becoming a lot more engaged, which is great. Now, we've got to keep growing these numbers, and we've got to keep growing the engagement, because if we're not important to our customers, we can't win over time. And on the next slide, if we look at engagement specifically, we've seen a real step change in the business.
We launched Tap & Zip really to unlock everyday spend in categories and merchants where Zip isn't accepted today, and we've seen early adopters transacting six times already in November. So really step changing engagement, and Zip becoming that preferred way to pay. We've also run an experiment this month with the cashback, so we can deliver additional value to our customers. And what we've seen in that bottom right chart is that our frequent users are now three times more engaged than they were three years ago. So through investing in the app, through increasing the acceptance network, through adding jobs to be done, and through issuing virtual card, we've really step-changed the engagement, and this is what we're going to continue to focus on. What are the monthly transacting users that Zip has?
Because if people are using us every day, every week, every month, we are important to them, and we can do a lot more. So that was the second. We now talk about global. Now, global is a big story for Zip. We've got a great business over here in Australia, but our ambition is to become the preferred wallet globally. This phenomenon that we've seen in Buy Now, Pay Later is truly a global phenomenon, and we are seeing incredible speed and adoption in most markets. Accordingly, we've recently established a dedicated new markets division that's being spearheaded by Tommy Mermelstein, our Chief Strategy Officer. It's a large team that is really capitalizing on a number of active opportunities through a mixture of investments, partnerships. This is going to become the focus for us as we move globally.
Many markets are still very much under-penetrated, but in the next twenty-four, thirty-six months, Buy Now, Pay Later is going to become a huge part of those markets, and we, and we have to be there. This is being driven by the collapse of the credit card, the adoption of debit cards, the growth in online, and COVID's obviously accelerated that with expectations of $5 trillion in online spend this year, and the millennial segment moving away from the unfair and broken credit card and towards digital wallets and interest-free wallets. On the next slide, if we go into the different markets, the U.S. has really been a growth engine for us, and every time we update the market, as you can see, the guys led by Adam Ezra and Brad Lindenberg are doing an unbelievable job.
We announced earlier last week that the QuadPay app, which is our app in the U.S., was 25th on the Apple Store. I just checked recently, and it's now 16th, so it's really getting enormous traction, which is a great result. Revenue, the team did about $11 million over the month of October, which, if you look at last year, they're looking to do 3x that at least in the coming year if that annualized rate continues. Similarly, in transaction volume, the U.S. did $160 million, and again, if you just contrast that with what they did last year, we're looking to, you know, double to triple those numbers.
And with 2.5 million customers, just in October, the team had 325,000 downloads, and when we looked at the November numbers, they were doing over 15,000. So a really great result and coming into an app that, again, is loved and used by many, many Americans. A long, long way to go. And that's really been underpinned on the next slide by a number of strategic partnerships that the U.S. team have been able to deliver. As you can see, most recently, they brought on Fanatics and GameStop. They've also got a fantastic relationship with Visa, which is helping a lot of the go-to-market strategy. We've been investing heavily in the leadership team over there and have added quite a number of great leaders there to help the go-to-market.
Just like Zip, this team invests heavily in innovation, and they were the first Buy Now, Pay Later to introduce a Chrome extension to again allow customers to use QuadPay, Pay in 4 outside the network. Again, it's a means to an end. These tools and innovation helps us win merchants over time, and the guys have a really strong pipeline going into the next calendar year. On the next slide, if we look at again around the globe, you know, we're very excited to announce today that Zip is officially launching in the U.K.
We were going to launch prior to COVID, but, you know, given what we saw there, we had to put things on ice, and we're very excited to announce that that team, led by Anthony Drury, has now scaled back up and have done a fantastic job to launch today. They've signed a number of merchants, and we're really starting to leverage a lot of our global relationships, and we're seeing that from the U.S. into the U.K., from Australia into the U.K., and again, even from the U.K. into Australia. So being one of very few Buy Now, Pay Later companies that can offer multiple markets through a single integration to merchants is going to put us in really good stead. And we've got Boohoo and JD coming on board.
We've also been able to leverage a lot of the relationships that we've built over here in Australia and the U.S., such as Stripe, and BigCommerce, and Shopify, to truly build a global platform. Why are we excited about the U.K.? You know, even though we are only entering now, Buy Now, Pay Later is still a very small share of the online checkout, and an even smaller share of the offline checkout. It is a market that has about $600 billion in retail spend, and an online market that's about 3 to 5 times the size of Australia. So we are. You know, we believe we are incredibly well-placed to deliver on our promise.
We're going live with 150 merchants, as Philip said, and we will be investing a lot in the product strategy in that market. We will be starting with a Pay in 4, but Zip's mission is really to deliver interest-free installments, not just for consumers, but for small business, whether it's small dollar or large dollar, and handling all the complexity in the back end, which is risk, regulatory, and conversion. So very excited to announce that and expect to announce, you know, progress over the next nine months. And finally, the fourth pillar that we announced to market was around Zip Business. So it's on the next slide. As we know, the small business community in Australia has about 2 million -3 million small businesses.
You know, some of them have been, you know, very much affected by COVID. It's a sector that employs around 7 million Australians and delivers close to 60% of GDP, so a really important sector for Australia, for and for Zip. We started with small business, that was our heritage, and, you know, we're very excited to be able to go back out and really help small business grow during this post-COVID recovery. So today, small business can accept Zip as a payment type, but now that small business can also sign up to a Zip interest-free digital wallet to pay for their everyday expenses. We signed up eBay recently, to offer interest-free and capital to those businesses, and we've got a very exciting pipeline coming up.
The team led by Jeff, who comes from Kabbage over in the U.S., is building a large tribe. We expect by the end of this financial year that this segment will be a very large part of Zip. We're also pleasingly able to secure a $100 million facility from Victory Park Capital, which was one of our earlier backers, and pleased to be able to bring them back on. You should expect to see good growth coming from this part of the business, and more announcement at the half year and full year. So just in closing, you know, we had a great FY 2020, but FY 2021 has really kicked off and accelerated.
You know, we really believe that we've got all the building blocks in place for accelerated growth, and thank you for all your support. Cheers.
Thank you, Larry. Are there any questions from shareholders on my address or Larry's presentation?
We've got two questions that have come in. There's an operational question and a question about share price, so first question is: shareholders are interested to understand whether the new Tap & Zip function will have a potential negative impact to the core merchant fee and merchant partnership business model.
Thanks, Dave. I might ask Larry or Pete. Thanks, Dave.
Yeah, great. So you know, the solution that we've struck with Visa, we are a principal issuer, so we'll be earning interchange on those cards, and it's very much for an in-store transaction. So if you look at our volume, you know, about 50% of our transactions are coming from in-store. Interestingly, if you look at the top places that customers are using Zip, it's at all the places where Zip currently isn't accepted: the grocery channel, fuel, and many others. So we are adding incremental revenue right now. We also see it as a great tool for us to go back in and strike commercial agreements with these merchant partners.
Because of the value that we bring to these merchant partners, we identify the customers, and we're a great demand gen for retailers. I think the second piece to keep in mind is that Zip derives income from really two sources, merchant fee income and customer fee income, which is more than 50% of our income. So our customers using Zip more often, again, in places where they weren't using us today and truly incremental, which is additional revenue, but also becoming a much more engaged customer, we expect our monthly customer fees to also increase over time. You know, it's been a great result. We do have a long way to go. We're still rolling it out across our merchant network.
But more engaged customers means more transactions, more revenue, and, and, and more customer fees.
Thanks, Larry. There's a question in relation to share price. The shareholder would like to get a sense from the board and MD as to why they think Zip Co's share price has not risen with the overall market over the past two months.
Pete, do you want to go?
No.
Look, we can't really comment on the share price. There's a lot of trading volume, a lot of volatility. All we can do is really focus on the key results. I think what we've shown you today is really strong results for the financial year twenty, and acceleration in the first quarter, and again in October. So, you know, again, we prefer not to comment on share price. All we're going to do is continue to work on the business and continue to make sure that we're going to do our best to deliver great results over time.
Thanks, Larry. There are no further questions at this point.
Thank you, Mr. Franks. That's the end of our questions, so I'll now move to the formal business as set out in the notice. The first item of business is tabling the minutes of the last annual general meeting, which took place on the 29th of November last year, and the extraordinary general meeting, which took place on the 31st of August this year. If any shareholders wish to review these minutes, they are available for inspection with the Company Secretary, David Franks. Moving then to the formal business as set out in the notice of meeting. The notice of meeting was provided to all registered shareholders on the 29th of October 2020, and is taken as read. Voting on all resolutions will be conducted by poll. Proxies have been inspected, and all those validly lodged have been accepted.
Proxies have been received, representing approximately 30.75% of the issued capital of the company. Undirected proxies or open votes that have nominated the chair as their proxy will be cast for, that is, in favor of each resolution in the notice of meeting. As I mentioned, voting will be conducted by way of poll. In order to provide you with enough time to vote, I will shortly open voting for all resolutions. At that time, if you are eligible to vote at the meeting, a new polling icon will appear in the virtual platform. Selecting this icon will bring up a list of the resolutions and present you with voting options. To cast your vote, simply select one of the options. There's no need to hit a Submit or Enter button, as the vote is automatically recorded.
You do, however, have the ability to change your vote up until the time I declare voting is closed. I now appoint David Squires from Computershare as the Returning Officer for the poll, and declare voting open on all items of business. The polling icon should soon appear. When it does, please submit your votes at any time. I will give you a warning before I move to close the meeting. The first item of business is to receive the company's annual financial report for the year ended thirty June 2020. The financial report and the reports of the directors and the auditors are now formally laid before the meeting. There's no vote on this item, and it's a discussion item only.
The company's auditor for the 2020 financial year, Mark Lumsden, and also Nihal Miranda of Deloitte, are present to take questions relevant to the conduct of the audit and the preparation and conduct. Are there any questions or comments on the financial report, the report of the directors and auditors on the management of the company, or otherwise relevant to the conduct of the audit and the preparation and content of the auditor's report to be put to the auditors?
There are no questions in relation to that.
Thank you, Mr. Franks. We'll then, therefore proceed to the resolutions that are set out in the notice of meeting. The first resolution, and it is as follows: To consider, and if thought fit, to pass the following resolution as an ordinary resolution. That for the purposes of Section 250R(2) of the Corporations Act, and for all other purposes, approval is given for the adoption of the remuneration report as contained in the company's annual financial report for the financial year ended 30 June 2020. If you wish to discuss this resolution, would you please submit your questions?
Thanks, Phil. I will note there are a couple of other questions coming in which are of more general nature, which we'll deal with at the end of the meeting. But in terms of Resolution 1, there are no questions.
Thank you, Mr. Franks. The proxies received in relation to this resolution are now on the screen. And I now put the motion. Shareholders can vote via the online portal. We'll now proceed to Resolution 2. Resolution 2 is as follows: To consider, and if thought fit, to pass the following resolution as an ordinary resolution. That Mr. Peter Gray, a director who retires by rotation in accordance with the company's constitution, and being eligible, be re-elected as a director of the company. If you wish to discuss this resolution, please submit your questions.
Once again, there's a couple of general questions, but, nothing specific on this resolution. We'll deal with those other questions at the end of the meeting.
Thank you. The proxies received in relation to this resolution are on the screen. I now put the motion. Shareholders can vote via the online portal. I'll move to Resolution 3, which is as follows: To consider, and if thought fit, to pass the following resolution as an ordinary resolution. That Ms. Pippa Downes, being eligible, be elected as a director of the company. If you wish to discuss this resolution, please submit your questions.
Once again, no questions on this resolution.
Thank you. The proxies received in relation to this resolution are on the screen. I now put the motion. Shareholders can vote via the online portal. And we'll proceed to Resolution 4. Resolution 4 is as follows: To consider, and if thought fit, to pass, with or without amendment, the following resolution as a special resolution. That for the purposes of Section 136 of the Corporations Act, and for all other purposes, the constitution of the company be repealed and replaced with a constitution in the form of the document which has been tabled at this meeting and signed by the chair for the purposes of identification, effective immediately. If you wish to discuss this resolution, please submit your questions.
Once again, Philip, there's no question on this resolution.
Thank you. The proxies received in relation to this resolution are on the screen. I now put the motion. Shareholders can vote via the online portal. And we will proceed to Resolution 5. Resolution 5 is as follows: To consider, and if thought fit, to pass the following resolution as an ordinary resolution. That for the purposes of ASX Listing Rule 10.14, and for all other purposes, approval is given for the issue and allotment of 30,268 STIP, Short-Term Incentive Plan, shares under the Employee Incentive Plan to Larry Diamond or his nominee, on the terms and conditions set out in the explanatory statement accompanying this notice of meeting. Are there any questions, are there any questions in relation to this resolution?
Thanks, Philip. Once again, for the resolution, there aren't any questions. A few more general questions, which we'll deal with later.
Thank you. The proxies received in relation to this resolution are on the screen. I now put the motion. Shareholders can vote via the online portal. We will proceed to Resolution 6, which is as follows: To consider, and if thought fit, to pass the following resolution as an ordinary resolution, that for the purposes of ASX Listing Rule 10.14, and for all other purposes, approval is given for the issue and allotment of 29,174 Short-Term Incentive Plan shares under the Employee Incentive Plan to Peter Gray or his nominee, on the terms and conditions set out in the explanatory statement accompanying this notice of meeting. Are there any questions relating to this resolution?
Once again, Philip, not to the resolution.
Thank you, Mr. Franks. The proxies received in relation to this resolution are on the screen. I now put the motion. Shareholders can vote via the online portal. We'll proceed to Resolution 7, which is as follows: To consider, and if thought fit, to pass the following resolution as an ordinary resolution, that for the purposes of ASX Listing Rule 10.14, Section 200B of the Corporations Act, and for all other purposes, approval is given for the company to grant AUD 249,150 worth of performance rights under the Employee Incentive Plan to Larry Diamond or his nominee, on the terms and conditions set out in the explanatory statement which accompanies this notice of meeting. Are there any questions relating to this resolution?
Thanks, Philip. No, not in relation to this resolution.
Thank you. The proxies received in relation to this resolution are on the screen. I now put the motion. Shareholders can vote via the online portal. We'll move to Resolution 8, which is in the following terms: To consider, and if thought fit, to pass the following resolution as an ordinary resolution, that for the purposes of ASX Listing Rule 10.14, Section 200B of the Corporations Act, and for all other purposes, approval is given for the company to grant AUD 239,150 worth of performance rights under the Employee Incentive Plan to Peter Gray or his nominee, on the terms and conditions set out in the explanatory statement which accompanies this notice of meeting. If you wish to discuss this resolution, please submit your questions.
Once again, Philip, no questions on the resolution.
Thank you. The proxies received in relation to this resolution are on the screen. I now put the motion, and shareholders can vote via the online portal. If we move to the conducting of the poll, that concludes the resolutions to be voted on today. Can all shareholders voting online please now ensure that they have submitted their votes? In a couple of minutes, I will close the voting system, or perhaps more accurately, cause the voting system to be closed. Please ensure that you've cast your vote on all resolutions. I'll now pause to allow you time to finalize your votes.
If anybody has any questions in relation to the submission that they're voting, they can send those through to the company secretary.
I'll just give it another minute, but at this stage, there's been no queries that are coming through in terms of the voting process.
Thank you.
There hasn't been anything that's come through, Philip, so I think, we can probably close the poll.
Yes. All right. Well, I formally declare the poll closed. The staff of Computershare will now process the poll, and the results of the poll will be announced are available. Is there any other business that can lawfully be brought forward?
On the Q&A portal, but we do have a few questions that have been asked.
Sure. So I will therefore, as that concludes the formal business for the meeting, I'll shortly close the meeting, but, perhaps if you could let us know what those questions were, Mr. Franks?
Yes. We've got a follow-up question in relation to Tap & Zip function. The question is: Does Zip get a cut in their Tap & Zip function, i.e., not all of it goes to Visa?
Yes, so we are a principal issuer, which we became in October, and as a result of that, we have negotiated interchange, which is the issuing component that we receive from Visa for all transactions that happen on scheme rails. That's both for offline, and then we also have a virtual card solution in the app, which allows customers to transact at stores where Zip isn't accepted, so outside our network, and on those we also derive issuing interchange.
Thanks, Larry. How does Zip pay for the 3% rebates, and will this continue?
Yeah, thanks. So, look, we have an experiment running this month, and it is a. It's being funded largely by Zip. But as you know, we do strike a lot of relationships with merchants, which you can see across the board, whether it's $10 off, 20% off, 10% off. So, at this stage, it's just a marketing experiment. We're hoping to analyze the results, and from that, just become a lot more efficient in how we go to market with our retail partners. There's a lot of value in discounting that happens across, and we're trying to create the right offers to the right customers to drive the right behaviors. It is an experiment.
We'll look at the results, and then that will let us know what is the return on investment, and how does that compare to some of our other channels.
Thanks, Larry. How do you see PayPal's intro into our market in the U.S. impacting QuadPay with regards to market share and future growth?
I think we certainly don't think it's a surprise they've entered the market. I think if anything, we'd be asking ourselves why it's taken them so long. What we also know and understand from competition in early stages of market maturity, it significantly increases awareness and adoption, and that's both on the consumer and the retailer side. So we think it's a good thing more broadly for the sector. I think our view is they have a few things that they should be focused on to shift away from their initial value prop, which was largely based on security for users. So they have certainly some challenges in delivering the incrementality to retailers that the broader Buy Now, Pay Later community or players provide.
I think, you know, Quad also, through the use of innovation and technology, has unlocked in-store transaction, not dissimilar to what we've done here in Australia with Tap & Zip and the ability to penetrate the offline opportunity. So something that PayPal certainly hasn't necessarily, you know, been successful at historically. I think the other thing we really like about Quad and their growth story is the number of transaction volume that is being generated from inside the QuadPay app. So this is obviously significantly different to the PayPal model also. So very good thing for the sector. Should significantly increase awareness and adoption as to early stage market maturity.
Thanks, Peter. What is the company's current debt level, and when does the company expect to generate a profit?
So the company has no [audio distortion] , so you know, we are significantly focused on the global opportunity we have before us. So all the cash is invested in growth opportunities. It's very important that we highlight that our growth activities do not come at the expense of unit economics, so we are not running loss-leading transactions. So it's very important that we demonstrate that the unit economics work in all jurisdictions as we invest for growth. So short-term horizon really is focused on the growth opportunity we have before us.
Thanks, Peter. What percentage of the receivables portfolio is currently subject to hardship claims?
It's about 0.1% of the receivables is currently subject to hardship. As we've demonstrated throughout the pandemic, really strong user engagement, and you know, market-leading results. We saw a spike, as Larry touched on, at the end of April, which saw about 1,200 customers enter formal hardship arrangements. We're now down to less than 300 current arrangements, which is pre-COVID levels. The book has been remarkably resilient in the way it's performed throughout the economic circumstances.
Thanks, Peter. If Australian merchants were allowed to surcharge transactions, what impact could this have to the Zip business?
At the highest level, we certainly believe that any commercial relationships we have with our retail partners should not be subject to regulation in this way. And you know, the RBA has you know commenced this review into the payment sector more broadly, and one of the aspects of that review will deal with surcharging you know potentially for retailers for Buy Now, Pay Later transactions. Certainly it is a well-known and understood concept in Australia, where consumers are happy to pay a small surcharge for convenience and to process those transactions. So we certainly don't think it would be a considerable detriment or huge amounts of friction for the industry.
I think, largely speaking, Zip is also very well placed for, should this be the eventuality, given that, 60% of our revenue already comes from the consumer side. So should there be any margin compression that might result from, you know, regulation in these ways, Zip will certainly be well placed to absorb that, should it be the eventuality. I think, as Larry also touched on, you know, solving acceptance in different ways, without the need for a contractual relationship with a retail partner is a critical part of Zip's strategy. So, you know, we're certainly very well placed, should that be a potential outcome.
I think the only other thing to add is that, you know, retailers have been paying for Buy Now, Pay Later for, you know, quite a number of years now. And the reason that they're happy to continue paying for it, which is, you know, slightly higher than other forms of payment tender, is because the benefits that these products and services are delivering to retailers. You know, average order values that are significantly higher than other forms of payment tender, new customer referrals, and better conversion. And they understand the value of that. You know, it's a quasi digital marketing benefit. They pay multiples of that across selling on multi-channels and Google and AdWords, so they really see the benefit of it, which is why, you know, we've seen huge adoption over here in Australia and globally.
There's a question: Does Zip have any plans to provide savings account functions similar to Afterpay's collaboration with Westpac recently?
Look, you know, for us, we're very focused right now on the mission, which is to be the first payment choice everywhere and every day. We've got a long way to go to deliver on that, though. So for us, you know, very focused on how do we get Zip accepted into many more places? How do we get Zip to be the preferred payment choice if you are paying bills, they're paying for groceries, paying for electronics? Whether it's consumers, but also small business. Whether it's consumers that are eligible for credit or consumers that aren't eligible for credit. I think we've got a long way to go before we become, you know, a bank. We're not a bank. We are a payment innovator delivering a digital wallet. We won't ever become a bank.
Thanks, Larry. What is Zip's strategic pipeline for 2021?
Zip's strategic pipeline? That's an interesting question. I mean, look, in terms of pipelines generally, I think if I look at the Australian commercial division, we've got a new leadership team under Hamish. And if I look at the pipeline, you know, pretty excited to see that Zip's talking to many of the big end of town that we've been trying to talk to for many, many years, and we hope a number of those should convert earlier next year. And that's providing great momentum for a lot of our global conversations. So, you know, we expect to continue to release, you know, more announcements to market on pipeline conversion.
And it's fair to say, as the brand becomes more well-known, and more well-known globally, that's helping accelerate conversion through the pipeline funnel. But kind of back to it, our strategic goals around payment acceptance everywhere and every day, it's about small business, it's about mobile app engagement, and it's about global. We've done a great job in the first quarter of the year, and we're going to continue focusing on that for the remainder of the year.
Are there any plans in the pipeline to enter the European Union as a market for Zip?
Yes, as we touched on earlier, we've really invested significantly in this new markets function, which is helping us enter new markets, whether it's through partnership, through minority investment, you know, issuing or retailer partnerships. You know, it's important for us to have exposure to the European Union at some point. Initially, though, what we said is we're going to go into the U.S. and make that a success. We're now launching in the U.K., which obviously has great proximity to the region. But it's fair to say we're having many conversations in parallel across many geographies. And you should hope to hear more from that function over the coming year.
This is a follow-up question, I think, to an earlier question from the same shareholder, asking if there can be an indication of when the company will turn a profit.
I think what Pete touched on is, you know, we started out in Australia, and we're able to prove operating leverage through having very strong unit cash EBITDA. So we've been able to prove that the model is cash profitable, and we continue to do that over here in Australia. Globally, of course, we are investing for growth, but as Pete touched on, ensuring that we maintain very strong unit economics, so as the volume growth flows through the waterfall, you start to see really strong cash profitability at the bottom. We would encourage, you know, shareholders to look at cash. That's obviously how we are running the business. Strong disciplines led by our Chief Financial Officer in how we invest and maintaining those standards.
Thanks, Larry. Banks have a heavy focus on fraud prevention. How does Zip's model protect consumers against fraud? Is this something that Zip will look into following the comment of, "We will never be a bank?
Yeah, so fraud and the protection of our customers and, you know, providing delightful experiences is always a key focus for us. We have, you know, significant measures in place to protect our customers. Two-factor authentication and the, you know, all the latest in fraud prevention, biometrics usage of the app, et cetera. So it's a key area of focus and something that, you know, the security value prop is something we hold very seriously to our customers. Currently, fraud would be a very low number in terms of our overall transaction volume. So, it will remain a key area of focus, particularly as we expand globally.
Thanks, Peter. The final question is whether the AGM is available as a recording, which I'll have to go back to Computershare and Lumi and just clarify.
Thank you. Thank you very much for all your questions. Thank you for your continued support of Zip and for your attendance today. I formally declare the meeting closed at eight minutes past eleven, and I'll now ask Lumi to close the virtual meeting system. Thank you.