How does sezzle make money?

Sezzle is a company that specializes in the development of financial technology and offers a payment platform to offline and online retailers. Sezzle makes money by charging merchants for its payment services.
When a customer uses Sezzle to buy something, the merchant pays Sezzle a fee equal to a certain percentage of the sale price.
Sezzle also makes money by selling extra services to merchants, such as preventing fraud and analyzing customer data.

In addition to the fees it charges for processing payments, Sezzle also makes revenue from customers who utilize its various forms of credit. Customers have the opportunity to take advantage of the “buy now, pay later” financing option, which gives them the flexibility to pay for their purchases in a series of installments spread out over time. The interest that Sezzle collects from its customers on these various financing arrangements can be a substantial contributor to the company’s overall revenue.

The overarching goal of the business model utilized by Sezzle is to simultaneously give merchants and customers a payment option that is both user-friendly and adaptable, while also generating income for the organization.

What does Sezzle do?

The company was established in 2016 by its current Chief Executive Officer, Charlie Youakim, and has offices in Minneapolis. It is one of the few fintech that did not begin in Silicon Valley. In 2019, the firm went public in Australia, despite the fact that it had only been operating in the United States. Due to the success of Afterpay in Australia, there was a greater familiarity with the BNPL industry in Australia.

Sezzle had more than 270,000 clients and more than 3,300 merchants listed in its network at the time that it held its initial public offering. During the same month, Sezzle made the announcement that it would be venturing outside of the US for the first time by joining the market in Canada. After its initial public offering (IPO), Sezzle had rapid growth, reaching over a million members and more than 10,000 merchants in just six months. The company was able to continue its rapid expansion by securing more funding from investors in the form of debt and equity financing rounds.

During the coronavirus outbreak, Sezzle completely obliterated the expectations of the investors. Sezzle rode the tide of the tremendous rise in e-commerce that was caused by mandates in the United States that required workers to work from home or remotely.

How does Sezzle work?

Sezzle is a financial technology company that operates in the buy now pay later industry and provides fast loans to customers. When a consumer assumes a loan with Sezzle, the merchant receives payment right away, and Sezzle is responsible for underwriting the risk associated with the loan.

The cost of the loan must be repaid in four equal installments by the lender, with the first payment having to be made at the time the loan is taken out. The subsequent three payments are set to be sent in equal amounts, two weeks apart from one another. There are no hidden costs or interest charges associated with Sezzle taking over the loan, and the company does not charge any interest on the loan.

As long as the borrower makes their loan repayments on time, they won’t be subject to any additional fees or charges, including those for late payments. When you sign up for an account with Sezzle, a “soft” credit check is performed. This type of check does not have an effect on your credit score or your likelihood of acquiring a loan. The check to authenticate your identification will be carried out by Sezzle.

The approval process for the customers’ bank accounts and loan facilities is lightning fast. The credit check that is performed by Sezzle while validating identity serves as the basis for the loan facility. After they have been approved, they are able to begin shopping and can select Sezzle as their payment method when they reach the checkout page.

The ever-expanding list of retail partners and customers that Sezzle works with is contributing to the company’s rising profile. Clients for desktop computers as well as mobile devices that run Android and iOS are supported by Sezzle.

Relatively recently, Sezzle, in collaboration with Ally Bank, initiated the provision of extended financing terms of up to four years for more expensive items. Ally Bank is the exclusive provider of the loan, therefore it is they who determine the parameters and restrictions.

How does Sezzle make money

The way that Sezzle generates revenue is by collecting merchant fees for every loan that a customer takes out with a participating retailer. You can buy Sezzle either online or in-store. Both options are accessible. However, the corporation also generates income from other business models, such as late payment fees and interchange fees, which contribute to the company’s total revenue. Its revenues are mostly derived from

Merchant fees.


The merchant fees that Sezzle charges bring in the majority of the company’s revenue. It is a common misconception that BNPLs generate the majority of their revenue through the collection of late fees from customers who have missed payments. On the other hand, this is not the situation with Sezzle.

Today, the majority of Sezzle’s revenue comes from fees charged to merchants; account holders are not subject to any late fees. In addition, because Sezzle does not charge any APR on loans, it is able to recoup its expenses through the retailers that are a member of its partner network.

When a customer uses Sezzle to get a loan, they hand up the first 25 percent of their purchase to the company at the register, and Sezzle covers the remaining cost of the item in full. Because of this, Sezzle takes on the risk associated with the transaction and co-signs the loan with the customer.

The merchant is subject to a transaction fee of 6% as well as a flat rate of $0.30 per sale when using Sezzle. The fee of 6% is somewhat greater than the fees charged by the majority of the other BNPLs that are active in the same market. However, the rate is up to negotiation, and businesses that process a greater number of transactions have the opportunity to discuss alternative price structures with the Sezzle team.

It is claimed by Sezzle that retailers who provide their payment method at the point of sale might experience an increase in sales of at least forty percent in the very first month. Because of this, retailers are open to the idea of including Sezzle in the roster of payment methods that they provide to customers.

Late payment fees

Additionally, Sezzle customers are subject to late fees for any missing payments. If you are late with a payment, the corporation will charge you a late fee of $7, and they will charge you an additional $10 to reactivate your account if you don’t make payment within two days of the scheduled payment date.

If a user is unable to make their monthly payment toward their loan, they will have their account suspended until the delinquent amount is paid in full. Users of Sezzle have the ability to reschedule charges if they believe they will be unable to pay on the date that was originally agreed upon. A fee of $5 will be assessed for each request to reschedule a payment.

Future growth engine

In the buy-now-pay-later industry, Sezzle is one of the fintech companies that is developing at the fastest rate. The number of new customers and merchants connecting to the company’s network is continuing to increase at a rapid rate.

Sezzle is continuing to grow its merchant base, and it just recently signed an exclusive partnership with Target for its consumers both in-store and online that will last for three years. To further broaden the payment options that are available to customers, Sezzle entered into a partnership with Ally Bank in September 2020 to begin offering long-term financing on amounts of up to $40,000 spread out over a period of 5 years.

Sezzle users have had the opportunity to sign up to have Sezzle submit payment information to the credit bureaus since the debut of the “Sezzle Up” platform in December 2020. This platform was developed by Sezzle. As a direct consequence of this, customers now have the opportunity to raise their credit scores by ensuring that they make on-time payments for their loans. These payments are then communicated to the credit bureaus. This is a significant step taken by the organization, and we can anticipate that it will result in an increase in the number of customers using the platform. In addition, the data demonstrate that the vast majority of consumers who use Sezzle repay their loans in full and do not incur any late fees.

Finally, in May of 2021, Sezzle made the announcement that the company intended to pursue an initial public offering in the United States. Despite the fact that no specifics have been decided upon as of yet, it appears that any earnings from an IPO will be utilized to fund Sezzle’s expansion beyond the United States and Canada. The business has made public that it is investigating the possibility of India becoming its subsequent market.


In the market for loans with no interest, Sezzle has competition from a number of other BNPLs. However, it is able to maintain its lead over the competition by utilizing cutting-edge technology, providing a variety of excellent payment options, and providing exceptional customer service. Other BNPLs and alternative payment companies such as PayPal, Splitit, Afterpay, Affirm, Klarna, and GoCardless are examples of some of the company’s most formidable rivals.

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