Sezzle branches out into interest lending with new bank partnership
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US-based BNPL player Sezzle (ASX:SZL) is moving into interest-based lending, the company announced this morning.
SZL said it will provide longer-term financing options via Ally Bank, the personal lending division of NYSE-listed Ally Financial.
Shares in the company rose by around four per cent in morning trade to ~$7.60.
Combined with a steady day of trade yesterday, the sector is taking a breather (for now) following a month of heavy selling, as another round of inflation fears prompted a re-rating in tech stocks valued on high revenue multiples.
SZL’s update is notable in that it marks the first departure among ASX-listed BNPL plays away from zero-interest instalment plans.
The company said the move is in response to feedback from its merchant customer base, who are looking to provide payment options to customers for a wider array of items, including larger more expensive purchases.
Subject to credit approval, customers will be able apply for fixed-rate loans of up to 60 months and US$40,000 from Ally Bank on the Sezzle platform, via a fully digitised loan approval process.
As an example of how the lending product will work, Sezzle said customers can apply for a US$1,000 loan and pay it off in six monthly instalments of ~US$174, at an annual percentage loan rate of 14.99%.
“With Ally Lending’s personalised, flexible financing solutions now available on Sezzle’s platform, we offer shoppers a responsible, transparent way to finance higher ticket items over a longer period,” SZL president Paul Paradis said.
At the end of April, Sezzle said it intends to file documents with US regulators in order to initiate a US IPO.
Similarly, competitor Afterpay also flagged a possible US listing as it focuses on the North American market to drive its next leg of top-line growth.