Even though BNPL solutions are all the rage today, there will be hurdles to overcome. Openpay, the Australian BNPL outfit, has withdrawn from the United States and laid off the majority of its employees in the country. A somewhat surprising development, although a necessary decision.
Openpay Makes A Tough Call
It is interesting to see how expanding overseas can backfire on BNPL companies these days. Openpay entered the US a while ago as the team pursued opportunities across the United States. Today, the BNPL firm has officially ceased all US operations and laid off nearly all American employees quickly.
Many people are surprised by that development, although they shouldn’t be. Openpay has struggled to maintain its overseas foothold since exiting the UK market earlier in 2022. Competing with local BNPL players is very challenging, and the rising interest rates – combined with a global economic downturn – make operations virtually unsustainable.
Furthermore, Openpay had to deal with mounting losses despite the American push. With money drying up quickly, the company needed a fresh capital injection from one or multiple US investors. That never materialized, forcing the company to halt its US-based operations altogether.
It will be interesting to see what the future holds for the buy now, pay later industry. Several players are under severe pressure, with Openpay joining the ranks of Klarna and Sezzle, among others. Rising interest rates are a big problem for buy now, pay later providers, and a further industry crunch will likely materialize.