Zip Abandons Plans to Buy BNPL Rival Sezzle

Australian buy now, pay later (BNPL) company Zip has jettisoned plans to buy rival firm Sezzle weeks after saying the deal was proceeding.

As Reuters reported Tuesday (July 12), the decision highlights the way investors have cooled toward FinTech firms amid the Russia-Ukraine war and rising inflation.

Zip said it and Sezzle agreed to walk away from the deal due to “current macroeconomic and market conditions,” adding the decision was “in the best interests of Zip and its shareholders, and will allow Zip to focus on its strategy and core business.”

As recently as June 22, Zip — which also owns the United States BNPL provider Quadpay —said its shareholders would vote on acquiring Sezzle by the end of the year.

Read more: BNPL Provider Zip Plans Fee Hikes to Offset Inflation, Interest Rates

The two companies announced the proposed deal in February. It would have seen Zip purchase Minneapolis-based Sezzle for 491 million Australian dollars (about $332 million), creating a combined firm with 8.8 million customers and more than 60,000 merchants in the U.S.

See more: Zip to Buy BNPL Rival Sezzle in $352M Deal

The news comes less than two weeks after another Australian BNPL company, Openpay, announced it was shutting down its U.S. operations after a few months in the country.

Read more: Aussie BNPL Firm Openpay Bails on the US

Openpay had called the U.S. its chief growth market, but rising interest rates, poor economic conditions, and the “likely ongoing capital investment required” led the firm to cease extending loans in the country and lay off most of its American workforce.

As PYMNTS has noted, this is all part of a broader struggle facing BNPL brands. Sweden’s Klarna recently saw an 85% drop in valuation, and Sezzle laid off 20% of its workers in March.