The news: Zip is closing its money management app Pocketbook in response to “significant changes” to its operating environment, per Business News Australia.
The Australia-based buy now, pay later (BNPL) provider acquired Pocketbook in 2016 for $7.5 million. The app will cease operations and delete its 800,000 user’s information on August 5.
How we got here: Zip was preparing for a year of growth—it announced plans to acquire Sezzle back in March, although the deal still faces a shareholder vote. But along with the rest of the BNPL sector, the company is struggling against the current economic backdrop.
Why this matters: Other BNPL firms have also explored money management solutions.
Solutions like these give users a clearer picture of their finances, which helps them make more informed and more responsible purchase decisions. That can mitigate scrutiny regarding the financial risks posed by BNPL products.
Closing Pocketbook could set the BNPL firm back from competitors that offer money management tools, possibly driving its users to other providers. Zip could integrate some or all of Pocketbook’s money management tools into its core app after it’s offline—but the decision may be a sign of more cuts to come from Zip, especially considering a possible recession would lengthen its path to profitability.
Keep reading: To learn more about the current challenges BNPL companies face amidst market volatility, check out our Era of Uncertainty: Buy Now, Pay Later report.
11 Times SquareNew York, NY 100361-800-405-0844