One of the familiar names at the checkout is on its way out. Zip, the Australian buy now pay later company that lets shoppers split a purchase into four instalments, has decided to close its New Zealand business and put all of its money behind its home market and the United States instead.
The company told its New Zealand customers by email that it would begin an orderly wind down of its local operations. From 16 August the spending limit on every New Zealand Pay in 4 account drops to zero, which means no new purchases can be made through Zip after that date. Anyone who still owes money keeps their existing repayment schedule and has to pay on the dates already set, so the shutdown does not wipe out what people already owe.
Zip runs a simple product here. A shopper pays a quarter of the price up front and the rest is taken in three equal instalments, usually every two weeks, so the whole thing is cleared inside about six weeks. There is no interest if the payments are made on time, which is what made these services spread so quickly across online and in store checkouts over the past decade.
In a statement reported by 1News, Zip Co NZ Finance Limited said that “following a strategic review of its business portfolio, it has decided to commence an orderly wind down of its New Zealand operations”. The company said the move reflected its focus on investing in its Australian and United States businesses, which it said continued to show strong momentum and profitable growth. Zip also said the financial impact of closing the New Zealand arm would be immaterial to the wider group, which is another way of saying this country was too small a part of the business to matter much to the bottom line.
That last point is the heart of the story. New Zealand is a small market with a lot of buy now pay later options fighting over the same shoppers. Afterpay is the best known and biggest of them, and it sits inside the same wallet as bank cards, Klarna and a handful of local players. For a listed company answering to Australian shareholders, a market that is not growing fast enough is an easy one to cut when the review comes around.
There is also a New Zealand specific reason that the sums may not have added up. Massey University banking expert Claire Matthews told RNZ that local shoppers may simply not be using the product as heavily as the company hoped. “Potentially, New Zealanders are not using it as much as they might expect elsewhere, because of the work that’s been done to discourage people,” she said. She also pointed to the risk of people juggling several accounts at once, saying “we have enough concerns about people having one. If you have multiple, it multiplies the problems.”
The work she is talking about is the tighter rulebook that now sits over the whole sector. For years buy now pay later escaped the main consumer credit laws because it does not charge interest or fees and does not take a security interest over the goods. That changed on 2 September 2024, when the Government brought these lenders under the Credit Contracts and Consumer Finance Act. Since then providers have had to run a credit check on customers, although they are allowed to use a simplified version rather than the full affordability test that applies to a normal loan. The Commerce Commission and the Ministry of Business, Innovation and Employment set out the detail of what lenders now have to do, including hardship help for people who fall behind.
Those rules were designed to protect people who were quietly building up debt across several apps, and they have done part of what they were meant to. But they also lifted the cost of running a buy now pay later book in New Zealand at the same time as the market was crowded and shopper spending was soft. Card spending has been weak through the winter, and a lender that was already a minor player here would have found little reason to keep pouring money in.
For shoppers the practical message is short. If you have a Zip account, use it before 16 August if you want, keep paying whatever you already owe on time, and do not expect the account to work as a way to spread new purchases after that. It is worth checking any subscriptions or regular payments that run through Zip so nothing is left stranded when the limit drops to zero.
Zip shares slipped on the Australian market after the announcement, though the company framed the exit as tidying up rather than retreating. For New Zealand it is a reminder that many of the payment tools we treat as permanent are run from across the Tasman, and can be switched off here whenever the head office decides the numbers no longer work.
Have you used Zip or another buy now pay later service, and will its exit change how you shop? Tell us in the comments below.
This article was written by AI, briefed to report the facts, hopefully without some of the bias people bring to the job 🙂
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