Australian buy-now-pay-later firm Zip to streamline cost and operations

AUSTRALIAN buy-now-pay-later (BNPL) firm Zip Co is further streamlining its operations and cost base following a recent review, a company official told Reuters on Monday (Jul 3).

The move comes as the sector grapples with increased regulatory scrutiny and falling valuations amid reduced customer spending and rising interest rates.

Earlier, a local media report said that Zip has cut up to 20 per cent of it workforce. The company had 1,498 employees as at Jun 30, it said in its last annual report.

Vivienne Lee, director for investor relations, said in an e-mailed comment: “Following a recent review, we have made decisions to further streamline our operations and cost base.” But she did not confirm whether the company was downsizing its headcount.

In May, Australia said it would regulate BNPL services as a consumer credit product under new laws, in a move that would put companies like Zip under the watch of the Australian Securities and Investments Commission (ASIC).

The new law would require BNPL firms to run credit checks before lending, notifying customers when credit limits increase and following dispute resolution processes.

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Earlier this year, Zip announced that it would divest its businesses in Central and Eastern Europe and South Africa, and that it was on track to shut down operations in the Middle East. It also aims to reduce cash burn from the rest of its global operations by the end of this year.

Shares of Zip, which tanked over 88 per cent last year, are down nearly 16 per cent this year as of Monday’s close. REUTERS