Economic complications have caused Openpay to withdraw from the US market as it cuts staff numbers and battles with continued losses.
Rising interest rates led the Australian buy-now-pay-later (BNPL) platform’s exit from a market it once described as its main destination for growth.
Following its material exit from the UK back in January of this year, the company appointed the US investment bank Keefe, Bruyette & Woods (KBW) as corporate advisors to assist with the search for potential investors.
This endeavour however ultimately caused the company’s losses to deepen by 65 per cent since January, and with its search for capital coming back futile, the company has now decided to whittle down a considerable proportion of its US staff and has stopped extending loans indefinitely.
The point-of-sale (POS) loan provider first emerged within an environment of considerably lower interest rates, which allowed it to raise funds in a relatively low-cost way.
In a statement, the company stated that it believes its remaining capital and funding will be better allocated to its businesses in Australia, and that although it will continue to look for commercialisation opportunities for both its US and UK platforms, both will cease to be used for loan origination.
The company’s Australia CEO Dion Appel said that its decision to leave the US market “was not taken lightly,” but agrees that the move has allowed it room to reallocate its resources to its existing business in Australia.
“This will also allow further focus on the capitallight OpyPro B2B business as it continues to move into a significant ramp-up phase,” Appel added.
The $120billion BNPL market is experiencing heightened and fierce competition in tandem with the new market strains.
Last month, tech giant Apple announced that it would enter the space with its own embedded solution called ‘Apple Pay Later’; as part of its iOS 16 update.
However, the situation is not so positive for BNPL firm Klarna, which despite gaining a value of $46billion as it climbed to the top market position, cut 700 staff jobs back in May as it dealt with the sector’s day of reckoning.