(Reuters] – Australian payments giant Zip Co predicted Monday a greater half-year loss that analysts expected. The reason was lower consumer spending in America as fiscal stimulus money dries out.

The downbeat outlook caused the stock of Australia’s largest buy-now-pay later (BNPL) standalone company to drop nearly 7%, its lowest point since May 2020.

Australia’s BNPL industry, which experienced a dramatic rise in popularity during the pandemic, has been consolidating rapidly.

Zip claimed it would take cost-saving measures in order to limit its losses. However, Zip did not give any more details.

RBC had estimated that bad debts represented 2.6% in transaction volumes during the first half of December 31. Zip explained that this could be attributed to Zip’s expansion into less mature markets and lower stimulus in the United States.

It has expanded rapidly into new markets in the past year by acquiring and investing companies in Europe and Asia. It said last month that it is in discussions to purchase a smaller Australian competitor, Sezzle.

RBC indicated that Zip’s strategy of expansion was most likely to lead to increased operating costs in the future.

Zip stated that it expects half-year earnings prior to income taxes, amortization, and depreciation to exceed RBC’s loss estimate of A$39.7 millions.

($1 = $1.0000)