According to the lawsuit, Shopify leveraged its market dominance to make its installment payment services the default option for merchants using Shopify platforms. This resulted in making it difficult for consumers to choose other BNPL options at checkout. Furthermore, Shopify allegedly imposed contractual penalties on merchants for using alternative BNPL providers like Sezzle.
Sezzle contends that Shopify’s actions systematically harmed its business with Shopify merchants and restricted consumer choice. The company seeks an injunction and financial compensation from the court.
In a press release, Sezzle highlighted how Shopify’s practices significantly impacted its business. Prior to 2021, when Shopify did not offer its own BNPL service, the value of transactions processed through Sezzle on Shopify stores increased by 1,200% from January 2019 to June 2021, with the number of merchants using Sezzle tripling. However, starting in 2022, Shopify began imposing a 1% to 2% penalty for every transaction processed through third-party platforms like Sezzle.
By 2023, Shopify’s own BNPL offering had grown substantially, leading to a reduction in the use of Sezzle services by half among Shopify merchants. The lawsuit also mentions that Shopify terminated the use of an inventory-locking tool designed to help retailers manage their stock better, forcing them to rely on Shopify’s integrated solutions.
Sezzle’s legal action aims to ensure fair competition and consumer-friendly payment options. By fostering a transparent market environment, Sezzle hopes to maintain a wide range of payment choices for merchants and consumers alike.
