How does Sezzle make money?

Business Model Element	Analysis	Implications	Examples
Value Proposition	Sezzle’s value proposition includes: – Flexible Payment Options: Allowing users to split their purchases into interest-free installment payments. – No Credit Check: Providing access to BNPL services without traditional credit checks. – Transparency: Offering transparent pricing with no hidden fees. – Convenience: Making online shopping more affordable and accessible. Sezzle appeals to consumers seeking a flexible and budget-friendly way to shop online.	Attracts users looking for installment payment options. Addresses the needs of individuals with limited or no credit history. Builds trust through transparent pricing. Enhances the online shopping experience by offering convenience. Offers a unique value proposition in the BNPL industry.	– Splitting purchases into interest-free installments. – Access to BNPL services without traditional credit checks. – Transparent pricing with no hidden fees. – Convenient and budget-friendly online shopping.
Customer Segments	Sezzle serves the following customer segments: 1. Online Shoppers: Targeting consumers who shop online and prefer flexible payment options. 2. Young Adults: Attracting millennials and Gen Z consumers looking for alternative payment methods. 3. E-commerce Retailers: Partnering with online retailers to offer Sezzle as a payment option. Sezzle focuses on both consumers and e-commerce businesses to expand its user base.	Targets online shoppers seeking flexible payment solutions. Appeals to younger demographics familiar with digital payments. Partners with e-commerce retailers to broaden its reach. Serves a diverse range of customers and businesses in the e-commerce space.	– Online shoppers looking for flexible payment options. – Young adults, including millennials and Gen Z consumers. – E-commerce retailers offering Sezzle as a payment method.
Distribution Strategy	Sezzle’s distribution strategy includes: – Integration with E-commerce Platforms: Partnering with online retailers to integrate Sezzle as a payment option on their websites. – Mobile App: Offering a user-friendly mobile app for consumers to shop and manage their Sezzle payments. – Marketing and Promotion: Running marketing campaigns to promote Sezzle as a payment choice. – Merchant Services: Providing merchant services and support to e-commerce partners. Sezzle utilizes integrations, a mobile app, marketing, and merchant services to distribute its BNPL solution.	Expands its reach by integrating with e-commerce platforms. Offers a convenient mobile app for users. Promotes Sezzle through marketing efforts. Provides merchant services to support partner retailers. Utilizes a multi-faceted distribution strategy in the BNPL industry.	– Integration with e-commerce websites as a payment option. – A user-friendly mobile app for consumers. – Marketing campaigns to promote Sezzle. – Merchant services for e-commerce partners.
Revenue Streams	Sezzle generates revenue through the following channels: 1. Merchant Fees: Charging e-commerce retailers a transaction fee for offering Sezzle as a payment method. 2. Consumer Fees: Earning income from late fees and processing fees on installment payments. 3. Interest: Charging interest on delayed or missed payments. Sezzle diversifies its revenue streams through merchant fees, consumer fees, and interest charges.	Collects fees from e-commerce retailers for providing Sezzle. Generates income from late fees and processing fees. Earns interest income on delayed or missed payments. Diversifies revenue sources within the BNPL sector.	– Transaction fees from e-commerce retailers. – Late fees and processing fees from consumers. – Interest charges on delayed payments.
Marketing Strategy	Sezzle’s marketing strategy involves: – Merchant Partnerships: Partnering with e-commerce businesses to expand its presence and offer Sezzle as a payment option. – Consumer Engagement: Engaging with consumers through marketing campaigns and promotions. – Social Media Presence: Maintaining an active presence on social media platforms to reach potential users. – User Referral Program: Encouraging users to refer friends and family to Sezzle. Sezzle focuses on partnerships, consumer engagement, social media, and referrals to market its BNPL platform.	Expands its user base through partnerships with e-commerce retailers. Attracts consumers through marketing and promotions. Utilizes social media for brand awareness and engagement. Encourages user growth through a referral program. Implements a comprehensive marketing strategy in the BNPL industry.	– Partnerships with e-commerce businesses. – Marketing campaigns and promotions. – Active presence on social media platforms. – User referral program for organic growth.
Organization Structure	Sezzle’s organizational structure includes: – Executive Leadership: Comprising executives responsible for strategic direction and decision-making. – Technology and Development Teams: Managing the development and maintenance of Sezzle’s technology platform. – Sales and Business Development Teams: Handling partnerships with e-commerce retailers. – Customer Support: Providing customer support and assistance. Sezzle maintains an organized structure to support platform development, partnerships, and customer service.	Led by executive leadership for strategic guidance. Manages technology development and platform maintenance. Collaborates with e-commerce retailers for business expansion. Provides customer support for user assistance. Maintains an organized structure aligned with its mission in the BNPL industry.	– Executive leadership for strategic direction. – Technology and development teams. – Sales and business development teams. – Customer support for user assistance.

Sezzle is a fintech company operating in the United States and Canada. It was founded by Charlie Youakim, Paul Paradis, and Killian Brackey in 2016.

Youakim and Paradis, who met while studying their MBAs in Minnesota, created Sezzle as a payment platform that would compete with the likes of PayPal.

The pair even went as far as calling the platform PayPal 2.0 for merchant processing, envisioning a service where merchants were charged 50% less and consumers could earn cashback rewards on their purchases. Unfortunately, the service failed to gain any traction.

While Youakim’s wife was scrolling through Instagram one day, she noticed Afterpay being offered as an option for merchants in Australia.

In May 2017, Sezzle pivoted to offering interest-free credit to young people who preferred to make purchases with their debit cards.

The founders then sought funding in the United States, but the buy-now-pay-later movement was still in its infancy there. As a result, Youakim and Paradis decided to hold an IPO on the Australian Stock Exchange.

The company raised $30 million on the first day of trading and by the time of the IPO in July 2019, Sezzle could already boast over 5,000 merchants and 430,000 customers.

Like many businesses, Sezzle profited enormously from the coronavirus pandemic as many shoppers migrated to making purchases online.

During this time, the platform entered into partnerships with Google Pay and Apple Pay to allow its payment service to be used for in-store purchases.

Merchant fees for 2020 increased by 266.9% over the previous year, with Sezzle adding over 1.3 million active users over the same period.

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Sezzle revenue generation

Sezzle has a relatively simple revenue generation strategy. The service is essentially free to consumers, provided they pay on time.

With that said, below is an overview of how the company makes its money.

Merchant fees

Like most buy-now-pay-late providers, Sezzle derives most of its income from merchant fees.

The merchant fee is charged at a flat rate of $0.30 plus 6% of the total transaction amount.

Merchants who enjoy higher order volumes may be able to negotiate a custom rate with Sezzle.

The merchant fee may also be negotiable for non-profits and businesses operating in certain industries.

Rescheduled payment fee

Consumers who want to reschedule the payments on a purchase for the second or third time are also charged a fee.

It should be noted that the first reschedule is free, enabling the consumer to push a payment date out by up to a fortnight.

The exact rescheduling fee depends on individual state regulations and the region where the purchase was made. Generally speaking, the rescheduling fee is around $5.

Failed payment fee

If Sezzle is unable to process a payment, a $10 failed payment fee is added to the total amount owed.

However, this fee is waived if the individual manages to make the payment within 48 hours of the due date.

Key takeaways

Sezzle is a fintech company founded by Charlie Youakim, Paul Paradis, and Killian Brackey in 2016. Co-founders Youakim and Paradis created Sezzle to compete with PayPal but later pivoted after seeing the value in buy-now-pay-later.
Sezzle derives much of its income from merchant fees, with merchants charged $0.30 plus 6% of the total transaction amount.
Sezzle is essentially free to consumers provided they make payments by the due date. For late or failed payments the fee is $10. There are also fees associated with rescheduling payment dates.