Compass, the consumer credit unit of Italy-based Mediobanca, has signed an agreement to acquire buy now pay later (BNPL) firm HeidiPay Switzerland from HeidiPay.

The financial terms of the deal were not disclosed.

Through the acquisition of HeidiPay Switzerland, Compass aims to become a consumer credit operator in the Swiss market with the help of the former’s distribution licence.

Compass CEO Gian Luca Sichel said: “The Swiss market is currently considered to be one of those with the highest growth potential in Europe for the Buy Now Pay Later segment.”

“Being able to count on hundreds of commercial partnerships throughout the country enables us to lay the foundations to further grow our client base and expand our already broad consumer credit product offering, with a significant contribution to be made from the first year of activity.”

Established in 2021, HeidiPay allows merchants, marketplaces, and lenders to provide their customers with next generation BNPL as well as retail financing solutions.

HeidiPay Switzerland is claimed to have more than 400 commercial agreements with major distributors, luxury brands, and technology operators across Switzerland.

Compass seeks to strengthen its partnership with the holding company HeidiPay with the acquisition. The Italian consumer credit firm owns a stake of 19.5% in HeidiPay since August 2022.

Besides, the deal will allow Compass to extract more value from its proprietary, full-digital BNPL solution PagoLight.

Mediobanca CEO Alberto Nagel said: “With the acquisition of HeidiPay Switzerland AG we are launching the geographical diversification of our Consumer Finance division, on the back of cutting-edge digital platforms to grant credit, together with a value-driven management approach that leverages on the risk analysis and assessment capabilities that Compass has developed in over 60 years of business.”

The transaction, subject to regulatory authorisations, is anticipated to be complete in the second half of 2023.

Closing of the acquisition will have a negligible impact on the Mediobanca Group’s Core Tier 1 capital ratio, said Compass.