Twin Cities financial startup Sezzle expands into Canada

Sezzle, a startup whose payment platform divides online purchases into interest-free installments, is now working with thousands of online retailers in Canada.

Sezzle CEO Charlie Youakim said the company chose Canada as its first international market because even though Canada differs from the U.S. as far as its credit market, the firm believes online shopping behavior is similar in both countries and that it will see similarly rapid adoption of installment payments as a preferred checkout option.

"In the United States, millennial consumers are moving away from credit cards and opening their first credit card account later than prior generations," Youakim said Monday. "In Canada, many young consumers have credit cards, but they are still averse to interest and debt."

Instead of setting up a traditional account, the platform allows new customers to create an account and a payment method. The customers pay 25% of the cost of the order at the time of purchase and typically choose to pay the remaining amount over three equal installments that are each two weeks apart. A $10 late fee, separate from any late fees a bank can charge, is levied on the customers if their scheduled payment fails to process in time.

Sezzle says its platform provides millennials and Gen Zers who have no credit history or want to avoid high-interest credit card debt with a more financially responsible way to pay for online purchases. The company's revenue comes from its U.S. retail partners — more than 3,300 as of March 31 — and the thousands of new Canadian online merchants. The merchants each pay a transaction fee of about 6%, about double what they would pay to credit card providers.

Sezzle partnered with the Italian sportswear brand Kappa to help coordinate Sezzle's launch in Canada because both companies have a primarily millennial and Gen Z consumer base, Youakim said.

Kappa also was looking for a new payment platform for the launch of its new e-commerce site, he said.

Sezzle may be entering another international market in the near future. The company said last month that the startup hopes to raise up to $30 million through an initial public offering on Australia's ASX exchange in June or July.

Paul Paradis, co-founder and chief revenue officer of Sezzle, said at the time that it is the right moment for the company to go public in Australia because investor demand is very high and it gives Sezzle access to a large amount of capital at a very critical inflection point for the startup.

CEO Youakim declined to provide an update on the IPO.