Zip Co: how a global BNPL expansion shrank back to two profitable core markets

Zip grew out of a simple frustration with traditional credit cards. Larry Diamond and Peter Gray founded the Australian company in 2013 because they believed consumers should be able to spread the cost of purchases without relying on revolving credit built around high interest balances.

The idea became part of the global buy-now-pay-later boom. Zip expanded quickly, acquired businesses across several countries and made the United States a major growth market through the purchase of Quadpay.

That expansion eventually went too far. Rising rates, weaker capital markets and mounting losses forced Zip to close or sell operations outside its strongest markets. By 2026, the company had become much simpler again: it operated mainly in the United States, Australia and New Zealand, while transaction volumes and profitability were growing faster than they had during the expansion years.

Zip started with consumer credit in 2013

Larry Diamond and Peter Gray co-founded Zip in Australia in 2013.

Diamond came from technology and investment banking, while Gray brought experience in consumer credit, risk and operations. That combination shaped the early product: a digital credit account with technology-driven underwriting and flexible repayment options.

The company wanted the checkout experience to feel simpler than applying for a conventional credit card. Customers could buy now and repay over time, while merchants gained another way to improve conversion and average order values.

Zip later developed separate products for different borrowing needs, including Zip Pay for smaller everyday purchases and Zip Money for larger transactions with longer interest-free periods.

Technology mattered because lending still required underwriting

Buy-now-pay-later can look like a payment button, but underneath it sits a credit decision.

Zip had to decide which customers could borrow, how much credit to offer and what level of losses the portfolio could absorb. Peter Gray helped build the company’s proprietary credit and decisioning technology around that problem.

This is one reason Zip’s business differs from a simple payments processor. A payment company moves money. A credit provider also takes underwriting risk and has to manage defaults, funding costs and consumer-protection obligations.

The strength of the model therefore depends not only on transaction growth, but on whether customers repay at levels that preserve an attractive net transaction margin.

Pocketbook added a personal-finance angle

In 2016, Zip acquired Pocketbook, an Australian personal-finance app that helped users track spending and budgets.

The acquisition reflected an early attempt to make Zip broader than point-of-sale credit. Management wanted to build a financial-services relationship around spending, budgeting and payments rather than appear only at checkout.

Pocketbook was not the business that ultimately defined Zip, but the deal showed the company’s appetite for expanding through adjacent consumer-finance products.

Quadpay made the United States central to Zip

The most important acquisition in Zip’s history came in August 2020 when it completed the purchase of US buy-now-pay-later provider Quadpay.

The transaction was valued at roughly A$1.17 billion for accounting purposes and gave Quadpay shareholders a substantial stake in the enlarged Zip group.

Quadpay brought more than a million US customers and thousands of merchants into the business at a time when buy-now-pay-later adoption was accelerating rapidly.

The US operation eventually adopted the Zip name. It became one of the company’s two core geographic businesses and, by the middle of the decade, its largest source of growth.

The pandemic-era boom encouraged a much wider expansion

Buy-now-pay-later companies attracted enormous investor attention during 2020 and 2021 as e-commerce accelerated and low interest rates made growth capital easier to obtain.

Zip used that environment to expand aggressively. It acquired or invested in businesses across Europe, the Middle East, South Africa and other markets while trying to build a global payments network.

The company also announced a proposed acquisition of US-listed Sezzle in February 2022, which would have added another major BNPL platform to the group.

The timing proved difficult. Financial markets turned sharply against loss-making growth companies as interest rates rose and investors demanded a clearer path to cash generation.

The Sezzle deal was cancelled in July 2022

Zip and Sezzle mutually terminated their merger agreement in July 2022.

Zip paid Sezzle US$11 million to cover transaction-related costs under the termination agreement.

The cancellation became a symbol of the wider reset happening across the sector. Growth at any cost was no longer enough, and Zip had to conserve cash rather than complete another large acquisition.

Management shifted its focus toward profitability, credit performance and the markets where the company already had meaningful scale.

Zip dismantled much of its international expansion

During 2022 and 2023, Zip reviewed its businesses outside Australia, New Zealand and the United States.

The company closed operations in the United Kingdom, Singapore and Mexico. It also sold businesses including Twisto, Spotii and South Africa’s Payflex.

By the end of the restructuring, Zip had exited or divested operations across the UK, Singapore, Mexico, South Africa, the Middle East and Central and Eastern Europe.

The retreat reduced cash burn and management complexity. It also reversed the earlier ambition to become a global BNPL conglomerate in favour of concentrating resources on two core regions.

Leadership changed during the reset

Zip also reorganised its executive leadership in 2023.

Cynthia Scott became Group CEO and Managing Director after previously leading the Australia and New Zealand business. Co-founder Larry Diamond shifted his focus toward the US operation, while Peter Gray remained closely involved with the ANZ business.

The change reflected a more mature operating structure. Instead of one founder overseeing a sprawling international growth strategy, Zip placed a group chief executive above two core regional businesses with dedicated leadership.

By 2026, Scott remained Group CEO, while the US and ANZ operations had their own chief executives.

FY2024 marked the return to profitable growth

The restructuring began showing financial results during the 2024 financial year.

Zip reported A$868 million in revenue and A$10.1 billion in transaction volume. Group cash EBTDA reached A$69 million, an improvement of more than A$117 million from the previous year.

The US business became the strongest growth engine, while credit losses and operating costs improved across the group.

Zip also cleared its remaining corporate debt through capital raising and refinancing during 2024, strengthening the balance sheet after the stress of the earlier expansion period.

The company returned to the ASX 200 in July 2024, reflecting the recovery in both operating performance and investor confidence.

FY2026 showed how much the business had changed

For the financial year ended 30 June 2026, Zip reported total income of A$1.347 billion, up 24.6% from the previous year.

Total transaction volume reached A$16.7 billion, an increase of 27.2%, while the company processed 112.1 million transactions.

Cash EBTDA rose 57.9% to A$268.9 million. The cash operating margin improved to 20%, while cash net transaction margin remained at 3.9%.

Net bad debts were 1.8% of transaction volume. That figure is important because rapid credit growth only creates value if losses remain controlled.

Zip ended the year with 6.5 million active customers and 97,400 merchants across its two core markets.

The United States became the growth engine

The Quadpay acquisition ultimately became far more important than Zip’s other international deals because the United States survived the strategic reset.

The US market offers a much larger retail base than Australia and remains less dependent on traditional credit-card economics than Zip’s founders originally confronted at home.

By 2026, US transaction growth was a major driver of group performance. Zip continued investing in merchant partnerships, underwriting technology and broader payment acceptance to make the product useful beyond a small set of integrated online checkouts.

The company also developed partnerships that can distribute Zip through larger commerce and payments platforms rather than requiring every merchant relationship to be won individually.

Regulation is now part of the core business model

Buy-now-pay-later grew partly because early products did not always fit neatly into the same regulatory framework as conventional credit cards.

That has changed as regulators in several markets have moved to apply clearer affordability, disclosure and consumer-protection requirements to BNPL providers.

Zip already operates regulated credit products in Australia and has supported more consistent minimum standards across the sector.

Regulation can raise compliance costs, but it can also favour larger providers with established underwriting systems, funding structures and risk teams. The category is maturing from a lightly defined payment innovation into a more conventional form of consumer credit.

AI is moving into underwriting and commerce

Zip’s technology strategy is also moving beyond the original BNPL checkout experience.

Machine learning has long been relevant to credit decisioning, fraud controls and customer risk. More recent developments in generative and agentic AI create another set of opportunities around commerce, customer service and automated purchasing.

Zip has begun discussing agentic commerce as a future area of development, where software agents may search, compare and transact on behalf of consumers.

The challenge will be applying automation without weakening responsible-credit controls. An agent can make checkout faster, but it does not remove the need to know whether a borrower can afford the resulting obligation.

Zip’s strongest period came after it became smaller

Zip’s first decade followed the familiar path of a fintech boom.

The company found a fast-growing consumer-credit model, expanded internationally and used acquisitions to chase global scale. The Quadpay deal gave it a valuable US business, but other acquisitions and market launches stretched the company just as capital markets turned against unprofitable growth.

The failed Sezzle transaction and subsequent market exits forced a reset. Zip closed or sold businesses, cut costs, reduced debt and narrowed its attention to the United States, Australia and New Zealand.

By FY2026, the smaller geographic footprint was producing much stronger results: higher transaction volume, higher income and substantially more cash earnings.

That makes Zip’s history less a story about BNPL growing without limits and more a story about learning where growth actually paid. The company founded to challenge traditional credit cards is still doing that, but its most important strategic decision may have been abandoning the ambition to do it everywhere at once.