Shoppers appear to be falling out of love with buy now, pay later providers, with all the major players bar Klarna reporting a decrease in web traffic in December.
New data from Macquarie Research found Afterpay and Humm reported the largest reduction in web traffic in December, down by 20 per cent. Sezzle, Clearpay, Zip and Affirm all reported falls between 5 and 10 per cent.
Swedish operator Klarna was the only BNPL operator to report an increase in web traffic, climbing by around 20 per cent.
Macquarie says the slowdown points towards a dampening of spending globally, which in our view was due to Omicron and greater regulatory scrutiny in the industry.
"The trend goes against 2020, when December saw month-on-month increase in web traffic vs. November," the report says.
The findings published by Macquarie follow a similar report released on Wednesday by Citi, which reported Zip mobile app downloads declined 37 per cent y-o-y in December and 2 per cent for Afterpay.
While Afterpay saw a sharp decline in web traffic in December, Macquarie says the operator's merchant additions saw a material increase in December compared to previous months.
"We do not track merchant additions for other BNPLs, but we suspect that the strong increase for Afterpay also points towards consolidation towards larger BNPL operators by customers. We think this also could be true from the perspective of merchants," Macquarie researchers says.
Afterpay retained their status as the rank one provider in the Australian BNPL landscape with a 42 per cent market share, down 2 per cent month-on-month, following a monthly downward linear trend.
Klarna retained second place at 28 per cent share following a re-aggregation of region ratings last September, which has influenced its portion of market share. Laybuy experienced the fastest growth for December 21, with ratings increase of 12.2 per cent month-on-month, while Humm experienced stronger growth of ratings compared to the previous month.
Macquarie says despite the drop in web traffic, no changes have been made to recommendations or targets prices with Afterpay, Humm and Latitude to outperform and Zip to underperform.
Shares in Afterpay have dived 7.2 per cent to $70.49 at 10.26am AEDT.
