Sezzle Inc (ASX:SZL)
Sezzle Inc. (ASX:SZL) is a technology-driven payments company based in the United States with the mission of financially empowering the next generation. The Company is registered as a ‘foreign company’ in Australia, under the Corporations Act, under the name Sezzle Inc.
What does Sezzle do?
Sezzle provides a payments platform that facilitates fast, secure and easy payments between End-customers and retailers. Sezzle’s payment product is a short-term, interest-free instalment plan that delivers to End-customers both a budgeting and financing value proposition (the Sezzle Platform).
History of Sezzle
The Sezzle founders created the Sezzle Platform after observing an increasing trend in the United States of a lack of availability of credit for consumers (particularly younger consumers). Sezzle’s founders also felt that traditional short-term consumer finance products were not consumer-friendly and were not effectively structured and designed to facilitate digital commerce. It was understood that technology could have a significant impact by filling both of these gaps and with this in mind, the founders developed a technology-based company and the Sezzle Platform was launched in 2017.
How does Sezzle generate income?
Sezzle earns its income primarily from interest-free lending to End-customers who purchase goods from affiliated merchants. Sezzle pays the Retail Merchant Clients the value of underlying sales net of transaction fees charged by Sezzle (Merchant Fees) for facilitating the purchases by End-customers transacted on their web sites. Merchant Fees are generated on each discrete, approved order placed by the End-customer through the Sezzle Platform. The fee is predominantly based on a percentage of the End-customer order value plus a fixed fee per sale. Merchant Fees as a percentage of Merchant Underlying Sales were 4.8% and 3.0% in FY18 and FY17, respectively.
Reschedule Fees are applied to End-customers where the shopper requests to shift their instalment schedule. Sezzle limits reschedules to two weeks from the originally scheduled date and allows End-customers to reschedule once per order for free. Additional reschedules on the order are levied a fee and are dependent on the shopper agreeing to that additional fee.
Sezzle’s other main source of income is End-customer Other Income, which includes End-customer Failed Payment Fees, net of fee waivers and net of the expected cost of uncollectible amounts attributable to Failed Payment Fees.
Failed Payment Fees are applied in cases where the End-customer’s payment fails in the automated payment process. In these instances, the fee is waived if the End-customer corrects the failure in the 48 hours after the failure of the payment. If the failure is not corrected in 48 hours, the Failed Payment Fee remains and must be paid before the End-customer can use Sezzle again.
Sezzle does not charge interest or initiation fees for offering credit to End-customers and has no current plans to offer any interest or fee-bearing product to End-customers.
For more information on Sezzle Inc see the Sezzle Inc Prospectus