Sezzle Sues Shopify for Alleged Antitrust Violations in BNPL Market

According to a statement released alongside the lawsuit, Sezzle accuses Shopify of “rigging” the checkout experience on millions of merchant websites to make using any BNPL service other than its own “extraordinarily difficult.” Shopify, Sezzle claims, made its in-house payment tool the default option and penalized merchants for choosing rival services.

The legal filing alleges that Shopify began charging merchants a 1% to 2% fee in 2022 for processing transactions through non-Shopify BNPL providers, including Sezzle. Per the lawsuit, this move significantly undercut Sezzle’s business, which had previously seen dramatic growth on Shopify’s platform—posting a 1,200% increase in transaction volume between January 2019 and June 2021.

Sezzle asserts that Shopify’s practices violate federal antitrust laws by limiting competition and harming both merchants and consumers. “Shopify’s ongoing misconduct has therefore systematically eroded Sezzle’s business with Shopify merchants,” the lawsuit states, “and reduced (or eliminated) the BNPL choices and quality available to merchants and consumers alike.”

Per the same statement, Sezzle is seeking both monetary damages and an injunction to halt the alleged anti-competitive behavior.

Shopify has not responded to requests for comment as of Tuesday. The Ottawa-based company, which provides eCommerce infrastructure to millions of businesses across more than 175 countries, launched Shop Pay Installments in June 2021 and has since grown it into a dominant BNPL option on its platform. According to the lawsuit, more than 75% of all BNPL transactions processed through Shopify merchants in 2023 used its in-house product.

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Sezzle further claims that Shopify removed critical tools like an “inventory-locking” feature from rival services, allegedly reserving it for exclusive use with Shop Pay Installments. The tool helps prevent overselling and associated customer dissatisfaction, offering a competitive edge to providers who can access it.

Read more: 9th Circuit Revives Privacy Lawsuit Against Shopify Over Data Tracking

The legal action also highlights an incident from 2018, when two senior Shopify executives reportedly visited Sezzle under the pretense of exploring a partnership or acquisition. Instead, the lawsuit alleges, Shopify used the meeting to gather proprietary information to replicate Sezzle’s service.

Despite the legal turmoil, Sezzle’s business outlook has recently shown strength. The company noted in a press release Monday that Shopify-related volume made up less than 5% of its total revenue in Q1. Additionally, Sezzle stock has surged in 2025, nearly tripling in value, driven in part by revised earnings guidance and increased consumer usage.

“This action is an important step in ensuring that merchants and consumers have access to diverse and innovative payment solutions of their choice,” Sezzle CEO Charlie Youakim said in the Monday release.

According to analysts, market optimism around BNPL companies like Sezzle stems from the sector’s relative immaturity and growth potential. In a recent note, B. Riley Securities analyst Hal Goetsch observed that while the global BNPL market is still under $100 billion in volume, credit card spending is measured in trillions—leaving substantial room for expansion.

Nevertheless, Goetsch also noted that Sezzle’s smaller scale compared to major rivals such as Klarna, Afterpay, and Affirm could pose challenges when negotiating with larger retail partners.

Source: Payments Dive