Buy now pay later company Zip Co said it is “well placed” to respond to rising interest rates, with a series of initiatives that includes increasing consumer fees, merchant re-pricing, speeding up customer repayment times and refinancing legacy receivables.

It said a 25 basis point increase in the base rate in the United States increases its cost of funds by 2 bps per transaction. It did not give a similar breakdown for its Australian or other operations.

The company said its aim is to be profitable in 2023/24 and it is taking steps to achieve that goal.

These include reviewing its capital allocation for its “rest of the world” businesses and changing its risk settings to improve its credit management.

Zip made a loss of A$172.8 million in the December half-year. Net cash used in operating activities was $25.3 million.

Bad debts and expected credit losses were $148.3 million – an increase from $29.5 million in the previous corresponding period. Net bad debts written off rose from 1 per cent of underlying volumes in the December half 2020 to 2.8 per cent in the latest half.

It increased Zip revenue by 88.5 per cent year-on-year to $301.3 million. Customer numbers grew 74 per cent.

The company said its deal to acquire Sezzle is on track, with a shareholder vote scheduled for later this year.

The market was not convinced by the statement. Zip’s share price fell more than 10 per cent to 46 cents yesterday. The stock has fallen from a high of more than $12 a share in February 2021.