The news: Zip’s transaction value accelerated in FY 2024 (ending June 30) despite losing active users, per its earnings release.

• Zip’s total transaction value increased 14% YoY to $10.1 billion in FY 2024, up from 7.7% last year.
• Active customers decreased 2.9% YoY. The prior year, active customers fell 3.5% YoY.

What this means: Stronger growth despite declining users signals that Zip’s customers are using the BNPL option more frequently and for higher-value purchases.

• The BNPL provider’s merchant network grew by 9.6% YoY. This included an expansion into new verticals like automotive.
• Pushing deeper in-store also helped boost growth. Zip’s debit card volume shot up 150% YoY. And its tie-up with Google Wallet made it easier to use the BNPL method in stores, even without the card. In-store transactions now account for 20% of all Zip’s US transaction value.

The bigger picture: These growth patterns are reflected across the BNPL industry.

• US BNPL payment value overall is expected to grow 20.8% YoY in 2024, per our forecast.
• But the number of US BNPL users is growing at a much slower rate. We expect it will increase 6.9% YoY this year, down from 17.0% in 2023.
• Meanwhile, the average US BNPL user will make $1,090.31 in BNPL purchases this year, up 13% YoY.

What’s next? To further its in-store push, Zip is in talks with Apple to integrate its offering into Apple Pay, Zip CEO Cynthia Scott said during the company’s earnings call.

• In June, Apple shut down Apple Pay Later and will offer third-party BNPL options like Affirm instead.
• Appearing on Apple Pay would be a large opportunity for Zip to increase its users’ transaction frequency and in-store transaction volume.

Our take: As BNPL user growth slows, securing large partnerships will become more important for BNPL fintechs like Zip to maintain growth.

Providers will rely more heavily on increasing the average spend per user through higher purchase frequencies and higher value transactions, in addition to trying to bring in net new customers.