Australia’s BNPL Space Crushed by Rising Inflation, Interest

The buy now, pay later (BNPL) space in Australia is feeling a big chill from the once sizzling hot market that’s now experiencing a lag in digital payments shares amid a wider technology selloff in 2022. 

Shares of BNPL firm Zip on the Sydney Stock Exchange (SSX) and Sezzle on the Australian Stock Exchange (ASX) lost most of their pandemic-era gains, Bloomberg reported Sunday (July 24). 

See also: Zip Abandons Plans to Buy BNPL Rival Sezzle

Zip shelved plans to acquire BNPL rival Sezzle earlier this month, PYMNTS reported, as investors cool FinTech funding amid the Russia-Ukraine war and rising inflation. Zip said it and Sezzle mutually decided to drop the plans due to “current macroeconomic and market conditions.”   

Rising interest rates and inflation in Australia along with weak consumer sentiment are accelerating drops in payments shares, Justin Tang, head of Asian research at United FirstPartners, told Bloomberg.

Read more: BNPL Firm Zip Backs Away From Crypto, Business Lending

IG Markets analyst Hebe Chen told Bloomberg that the uncertain regulatory climate combined with always-increasing global competition from Big Tech firms like Apple and PayPal adds to an already tough environment. 

Australian BNPL firm Afterpay was removed from the S&P/ASX 200 Index earlier this year after it was acquired by Block.

Related: Sezzle’s 56% Plunge Leads CE100 Slump as Earnings Season Begins

Last week’s Connected Economy 100 (CE100™) Index continued its dip, with the group down by 3.3% as of July 18. The decline was led by the Communications pillar, which lost 10.8% (led by Zoom’s 16% decline).

The Pay and be Paid pillar also slid 6.5%, after Sezzle lost nearly 57% through the week. As for earnings, Citigroup was up 6.7%, boosting its loan loss reserves.

You may also enjoy: BNPL Firm Sezzle Sues GameStop for Dropping Payment Service

Minneapolis-based Sezzle is also suing GameStop over allegations that the video game retailer broke a contract by dropping Sezzle’s payment services. GameStop was one of the numerous retailers using Sezzle in the U.S., PYMNTS reported last week.