The Zip Co Ltd (ASX: Z1P) share price is tumbling as the United States puts pressure on buy now, pay later (BNPL) providers. Additionally, reports that talks of a merger with Sezzle Inc (ASX: SZL) hit the rocks are swirling on Friday.
At the time of writing, the Zip share price is trading at $4.11, 7.64% lower than its previous close.
Let’s take a look at all that might be weighing on the BNPL giant’s shares today.
Zip share price tumbles amid heat from Washington
The Zip share price is having a rough day amid the launch of an inquiry by the United States Consumer Financial Protection Bureau (CFPB).
The body has issued orders to 5 major BNPL companies – Zip, Afterpay Ltd (ASX: APT), Klarna, Paypal Holdings Inc (NASDAQ: PYPL), and Affirm Holdings Inc (NASDAQ: AFRM) – to collect information on the risks and benefits of their offerings.
CFPB is worried about increasing debt, regulatory arbitrage, and data harvesting in the technologically advancing market.
It notes people can enter BNPL loans with multiple providers, leaving them vulnerable to financial hardship.
The body’s concerns mirror those of Financial Counselling Australia. It recently found the number of people approaching Australian financial counselling services with BNPL debt increased more than 50% over the last 12 months.
Additionally, CFPB believes some BNPL providers might be improperly evaluating which consumer protection laws apply to their services.
Finally, it’s concerned by BNPL providers’ ability to retain data on customers’ payment histories. It noted some companies have used this data to create “closed-loop shopping apps” with partner retailers.
CFPB states it working with international partners – some of which are in Australia – to conduct the inquiry.
Rumoured Sezzle merger reportedly in the bin
Potentially also weighing on the Zip share price today are reports it has both entered and exited merger talks with fellow ASX-listed BNPL provider, Sezzle.
According to The Australian, the companies scrapped unverified discussions of a merger due to a disagreement on valuations.
The publication claims Zip abandoned the talks after Sezzle asked for more than Zip was willing to offer.
The post Zip (ASX:Z1P) share price dives 8% amid US concerns and Sezzle merger rumbles appeared first on The Motley Fool Australia.
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More reading
- ASX BNPL shares tumble today amid US probe
- Why Blackmores, Mesoblast, Vulcan, and Zip shares are sinking
- Why is the Sezzle (ASX:SZL) share price tumbling 7% today?
- Zip (ASX:Z1P) shares just topped these end-of-year rankings
- What has experts worried about ASX BNPL shares in 2022?
Motley Fool contributor Brooke Cooper has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns and has recommended AFTERPAY T FPO and ZIPCOLTD FPO. The Motley Fool Australia owns and has recommended AFTERPAY T FPO. The Motley Fool Australia has recommended PayPal Holdings. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.
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