Why is the Zip share price sinking yet again on Thursday?

The Zip Co Ltd (ASX: ZIP) share price is facing another rocky day on the market today.

The company's share price is currently trading at 79.3 cents, a 4.79% fall. For perspective, the S&P/ASX 200 Financials Index (ASX: XFJ) is slipping 1.30% at the time of writing.

Let's take a look at what might be impacting the Zip share price.

Zip share price falls

Zip shares are falling, but they are not alone in the buy now, pay later (BNPL) sector. Block Inc (ASX: SQ2) is slipping 4.4% today, while Sezzle Inc (ASX: SZL) shares are descending 5.77%. Openpay Group Ltd (ASX: OPY) is sliding 2.17%. In contrast, Beforepay Group Ltd (ASX: B4P) is climbing 1%.

The Zip Co share price also plummeted 8.17% on the Frankfurt Stock Exchange in Europe overnight.

Investors in BNPL shares, including Zip, could be reacting to news out of the United States on Tuesday.

Rising interest rates and late payments are a concern for BNPL shares, the Wall Street Journal reported.

The WSJ highlighted late payments or related losses were "piling up" for the biggest players in the industry, naming Zip specifically.

Interest rate hikes could also pose a problem for these BNPL companies, due to their reliance on credit lines, the publication noted.

Commenting on the outlook for BNPL shares, the WSJ added:

Buy-now-pay-later companies boomed when consumers were flush with cash and buying goods at a feverish pace. How they fare in a downturn, when savings evaporate, spending slows and bad debts mount, is untested.

The young industry finds itself in a tricky spot at a time when the economy is slowing and, some fear, headed for a recession.

Zip shares hit a multi-year low today and based on the current share price, are at their lowest level since May 2018. Zip shares fell 9% yesterday amid broader tech sector weakness.

The company has faced multiple broker downgrades following the company's third-quarter update, due to slowing growth. Despite this, Zip reported 39% higher revenue and 27% more transaction volumes year on year.

Zip share price snapshot

The Zip share price has fallen 88% on the ASX in the past year, while it has dropped 81% in the year to date.

For perspective, the S&P/ASX 200 Index (ASX: XJO) has shed 1% in the past year.

Zip has a market capitalisation of about $545 million based on the current share price.