Ann: November Business Update, page-99

Hey BD, the convenience fee introduction will do one of two things, below - it's kinda a win/win for the company really and as you mentioned has only really been rolled out recently.

1) generate revenue per transaction as users pay the convenience fee to be able to pay off balances and update their spending limit/credit quickly with a debit/credit card (however Sezzle incurs transaction expense from the bank - transaction expense is Sezzles 2nd biggest expense after staff wages)

Or if users choose not to pay by debit/credit card or incur the fee:

2) reduce Sezzle transaction expense as users pay via ACH to avoid the convenience fee.

With either method, Sezzle will have a better bottom line. Users still have the opportunity to not incur any costs and have a free bnpl service, by paying using ACH.

The issue with ACH is the time lag. So users pay off using their bank but their user spend/credit in Sezzle won't be updated until fully processed. A quick look in an online forum (cut below) shows Sezzle users might be accepting of the convenience fee. Given Sezzle doesn't charge other fees like some bnpl, perhaps users will be ok with paying USD $1 if they need to pay off a balance quickly to refresh their credit?

To calculate the value of the initiative overall you'd have to understand how many payment transactions there are over a given time - I'm not sure any info out there could give a reliable estimate, but transaction expense has been an average of about USD$11m per qtr for the last few qtrs. Charlie Youakim indicated in a results webinar a couple of quarters ago that this cost can potentially be significantly reduced.