How Does Sezzle Makes Money? Idea hub

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Looking at its business structure, one would begin to wonder that how does Sezzle makes money if they really offer interest free loans?

Well, as surprised or unconvinced as you are, to be discussed below is the breakdown and in-depth analysis of its three (3) revenue streams.

Plus their other products and services, as well as the magnificent Sezzle business model, revenue, and how Sezzle actually works.

But before answering the one million-dollar question of how does Sezzle makes money, it’s important to know what Sezzle itself is.

What is Sezzle business model?

Sezzle is a popular financial company that renders “buy now, pay later” services to its users with on installment basis without any interest.

The idea hub was founded in 2016 by Charlie Youakim. On the 30th of July, 2019, Sezzle started trading on the Australian Securities Exchange (ASX), using the imprint “SZL”.

At the time of writing this article, Sezzle has close to 3 million active customers with more than 40,000 active merchants using its service.

How does Sezzle works?

Any interested person who want to benefits from the Sezzle business model will have to register as a customer first.

After the registration and all, the user can then shop from more than 40,200 partnering Merchant having the “buy now, pay later” checkout option.

How Sezzle makes money

Once the “buy now, pay later” order is complete, such customer is expected to pay the loan back to Sezzle on a 4 interest-free installment plans within 6 weeks.

While Sezzle is not the first company to be using this business model to grow and help their customers, there are other similar companies too.

This means Sezzle also have competitors like any other kind of business. Some of these competitors include Afterpay, Affirm, Klarna, Splitit, Quadpay, Easybuy, etc.

What is the Sezzle business and revenue model?

Sezzle makes money and generate steady profits through some selected revenue models that the company merged with its organizational layout.

These revenue models, among others are:

  • Fee-for-service (FFS) business model
  • Commission based business model
  • Mergers and acquisitions (M&A) business model
  • B2B B2C (partnerships) business model

How does Sezzle make money?

Statistically, Sezzle has over 2.8 million active customers with more than 40,200 operative merchants on its platform.

In 2021, during the company’s Half Year Report, it was categorically stated by the company that its had $856+ million in underlying merchant sales (UMS) in the year before.

Seeing this statistic and the slogan of Sezzle as an interest-free business model, one will definitely ask question.

Questions like how does Sezzle makes money? Where is Sezzle getting money to pay its staff? How can Sezzle realize money off its active customers, and underlying merchant sales?

Without further ado, below is a breakdown analysis of how Sezzle makes money and its revenue model.

3 ways on how Sezzle makes money from its customers and merchants

Sezzle has a very smart revenue model that makes money in 3 ways which include; merchant fees, late payment fees, as well as rescheduling convenience fees.

1: Merchant Fees

Sezzle made the most of its revenue out of the fee paid by the merchants to the company. Just like a commission out of the products they sold via the platform.

As stated earlier, Sezzle renders its service to its consumers free of charge without any interest or commission.

That is to say, the service Sezzle renders to the consumer is essentially free if the payments are made at the stipulated time.

Accordingly, whenever a purchase is made via Sezzle platform, the company only receive the first 25% from the consumer and pay the whole price to the merchant.

As such, Sezzle will now charge the merchant with a 6 percent transactional fee that is equal to $0.30 in every transaction.

Note that the 6 percent transaction fee is a standard fee although it sometimes vary depending on the merchant partner profile risk.

The industry the merchant partner also operates in will determine the amount to be charged as the transactional fee.

2: Late Payment Fees

While answering question on how does Sezzle makes money earlier on, it was stated that Sezzle doesn’t charge its customers, right?

Well, there is an exception to that assertion and such exception is what we will be discussing now.

The late payment fee or account activation fees is an addition to the charges that the company get from the merchants.

That is, where a customer defaulted in paying his money for the purchased item as at when due, Sezzle will charge such user a fee in the known as the Late Payment Fees.

The charges will be billed to the customers’ account 2 days after he failed to pay in line with their scheduled. His account will then be freezeed levied with a $10 reactivation fee.

3: Rescheduling Convenience Fees

The last way through which Sezzle makes money is via what the company calls Rescheduling Convenience Fees.

What this means is that, Sezzle will provide its customers with an option to freely delay their scheduled payments for another 2 weeks or thereabouts.

By way of compensating the company for exercising patience, Sezzle will then charge an additional $5 known as the Rescheduling Convenience Fee.

Doing this will save the customer an extra $5 if his account is to be frozen. Instead of paying $10 as an Account Reactivation Fee explained above.

Hence, once the customer is able to predict his own default, he can willingly go into the rescheduling for his own convenience and pay $5.

And what this means to Sezzle is another revenue generation stream and before you know it, the company is making money steadily steadily.


From the above discussed, it is obvious and glaring that Sezzle is a “buy now, pay later” business organization that operates on interest-free installments payment basis.

While this obvious truth of interest-free business operation put many admirers into wonders of how the business really works and cope.

The breakdown and analysis made above must by now answer the question of how does Sezzle makes money from its customers and merchants?

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