Sezzle has more than one million active buyers and more than 10,000 dealers. Economic uncertainty due to COVID-19 issues has led to a growing demand for flexibility in consumer payments. Rising consumer demand has been the driving force behind the rapid recovery that Sezzle has similarly perceived among Canadian distributors and consumers, reflecting the growing market interest in alternative payment solutions. Sezzle`s “Buy Now, Pay Later” business model creates an interest-free solution that does not impact solvent customers and is free of charge in the U.S. and Canada. In reviewing Sezzle`s business, boD`s decision highlights a number of facts that support the conclusion that Sezzle provided loans. The decision states that Sezzle`s user agreement and concessionaire agreement describe Sezzle as “a consumer loan and not as a purchase of credit purchase agreements by merchants.”  The decision also notes that Sezzle reversed the traditional credit financing model. Traditionally, a credit sale involves a merchant borrowing a credit agreement with a consumer and then selling the dealer-consumer contract to a financing unit. In the Sezzle program, Sezzle markets its financing products to consumers before consumers decide to buy or purchase a particular product from a particular distributor. Applying these principles to Sezzle, the BOD concluded that Sezzle was exercising a loan. The decision refers to Sezzle`s “significant commitment” to merchants. The decision seeks to provide merchants, beyond the purchase of credit sales, with marketing services, payment settlement services, consumer dispute resolution services and paid accounts for merchants in order to hold sezzle`s revenue.  Sezzle resellers see an average 20% increase in order value and a 10% increase in repeat purchases.
It also increases your overall conversion rate by removing a significant purchase barrier. Sezzle has made a concerted effort to support retailers based in Canada. To that end, Sezzle recently introduced the most comprehensive store in the country, where consumers can find resellers who offer Sezzle`s Buy Now, Pay Later solution exclusively with Canadian retailers. The Department of Business Oversight (boCO) has recently taken two steps regarding deferred payment point-of-sale products. In the first action, BOD Sezzle, Inc. denied a license under California Financing Law (“CFL”) because of its previous unauthorized activities. Sezzle had partnered with merchants to offer a short-term, interest-free instalment payment contract. DBO concluded, however, that Sezzle`s business constituted a loan under the CFL. In a second complaint, the BOD issued a legal opinion to a separate fintech company, which stated that the company`s point-of-sale products were credits and were to be offered in California under a CFL license.  These two decisions have a clear impact on companies active in the field of deferred payments.
They also suggest that DBO will look for creative ways to expand the scope of its powers under CFL. . . .