A merger between struggling buy now, pay later companies Zip and Sezzle has been called off after a savage reassessment of the sector’s growth model, leaving investors questioning the future for junior, United States-focused partner Sezzle.

Zip shares bounced 6 per cent to close at 53¢ on Tuesday as investors breathed a sigh of relief, while Sezzle shares lost 38.55 per cent to close at a record low of 25.5¢, extending Monday’s 11.7 per cent decline.