(Reuters) – Australian buy-now-pay-later firm Zip Co (ASX:ZIP) is further streamlining its operations and cost base following a recent review, a company official told Reuters on Monday.
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% of its workforce.
The company had 1,498 employees as of June 30, 2022, according to its last annual report.
“Following a recent review, we have made decisions to further streamline our operations and cost base,” Vivienne Lee, director for investor relations, said in an emailed comment. However, the official did not confirm if the company is 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.
Earlier this year, Zip said it will 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 2023.
Shares of Zip, which tanked over 88% last year, are down nearly 16% this year as of Monday’s close.
($1 = 1.5053 Australian dollars)
