Zip Co., an Australian payments firm, saw its shares plummet by approximately 50% after revealing A$10.1 million ($7.1 million) in expenses tied to a fraud incident in the US. The company stated that coordinated individuals used legitimate credentials to create new accounts and execute unpaid transactions, impacting transaction volume and customer growth in July and August. The announcement follows the resignation of Joe Heck as CEO of Zip’s US operations, with Rory Herriman appointed interim CEO.
The firm derives about 70% of its revenue from the Americas. Citigroup analysts noted the incident raises concerns about disclosure and onboarding controls, though Zip believes it was an industry-wide issue. Additionally, Zip reported net bad debts of 1.97% of total transaction volume for the quarter ending September 30, up from 1.65% the previous year, with 1.93% in the US, attributed to seasonality and fraud mitigation measures.
Source: Bloomberg Markets · Summarized by HeadlinesBriefing