- Zip shuts down Pocketbook the money management application, to concentrate on its the core business.
- The move could be a sign of further cuts from Zip in particular, considering that the possibility of a recession, which could lengthen its road towards profitability.
- Insider Intelligence publishes hundreds of insight, charts and forecasts for this Payments & Commerce industry.
The story: Zip is closing its money management application Pocketbook due to “significant changes” to its operating environment, according to Business News Australia.
The buy-now, pay-later (BNPL) company acquired Pocketbook on June 5, 2016 with $7.5 million. Pocketbook will shut down and erase its 800,000 users’ data on August 5.
The way we arrived: Zip was preparing for an increase in its revenue. It announced plans to buy Sezzle in March however, the deal has to be approved by shareholders. However, like the other companies in the BNPL sector it is struggling with the current economic climate.
This month, Zip increased rates on both consumer and merchant fees to combat rising rate of inflation, rising interest rates and tightening regulation, according to the press release. Zip co-founder and CEO Larry Diamond said in the announcement. The closing of Pocketbook fits into this more specific strategy.
What is the significance of this? BNPL companies have also looked into ways to manage their money.
The company launched an app for managing money in the fall of 2013 called Money by Afterpay. The app includes the virtual debit card as well as an online savings account and transaction account.
And Klarna introduced a new service in the last month, dubbed “Financial Overview,” which offers a range of tools for managing money.
Solutions such as these provide users with an improved understanding of their financial situation, which can help to make more informed and responsible purchasing choices. They can also reduce scrutiny about the risks to financial security posed by BNPL products.
Shutting down Pocketbook could put the BNPL firm behind its competitors which offer tools to manage money and could force its customers to different service providers. Zip may incorporate certain or all of the Pocketbook’s tools for managing money in its main app once it goes offline. However, the move could be a sign that there are more reductions to come from Zip particularly when the possibility that a recession will slow the path towards profit.
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