Westpac's investment was made to implement zipMoney's products and services across Westpac's payments network.
zipMoney received a $40 million strategic equity investment from Westpac at $0.81 per share, representing a 14.1 per cent premium to the last closing price.
As part of the relationship, the two companies will explore other initiatives including the provision of currently in-development business-to-business products and services to Westpac.
The proceeds of the investment will be used to accelerate zipMoney's growth plans and the development of new products and technologies, including enhancing its data science and proprietary capabilities.
Westpac's investment will see the banking giant become a substantial shareholder in zipMoney with approximately 17.11 per cent ownership of the tech group.
The board of zipMoney has also agreed to appoint Westpac an additional non-executive director.
Zip CEO and managing director, Larry Diamond, says the Westpac investment is a pivotal moment for the company.
"This strategic deal with Westpac is a truly transformational moment for Zip and our unique customer value proposition," says Diamond.
"Things are changing so quickly: The rise of millennials, increasing competition and customer demands and the question of what comes after credit cards.
"It is a serious validation of the success of the Zip platform and offering, and the strategic relationship arrangements will deliver a significant opportunity to further accelerate the growth of our merchant network and origination volumes."
Westpac group executive, Gary Thursby, says Westpac's investment is evidence of their support of Australian startups.
"Our strategic relationship with Zip is another example of Westpac's commitment to supporting leading Australian entrepreneurs and Fintechs who are looking to bring great new capability to Australian consumers," says Thursby.
Business News Australia
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