MINNEAPOLIS, Minn.— Buy now, pay later provider Sezzle has filed a federal lawsuit against Shopify, accusing the Canadian e-commerce giant of undermining its business and violating antitrust laws by favoring its own BNPL service over Sezzle’s for the past four years, Payments Dive reported.
According to the lawsuit filed in U.S. District Court, Shopify’s proprietary BNPL installment program accounted for more than 75% of all BNPL transactions on its platform last year—just three years after launching the in-house service to compete with Sezzle and other third-party providers, Payments Dive said.
According to the lawsuit, Shopify is the leading provider of software that enables entrepreneurs to launch and manage e-commerce businesses using customizable templates. The company introduced its own buy now, pay later service, Shop Pay Installments, in June 2021, Payments Dive reported.
Shopify “used its market power” to make its own installment payment services the default BNPL provider on merchant websites, according to the lawsuit, and “rigged” the checkout process to make it “extraordinarily difficult” to choose another BNPL option.
Shopify also imposed fees on millions of merchants through contracts that “penalized them” for using Sezzle or another non-Shopify BNPL option, according to the suit, Payments Dive explained.
“Shopify’s ongoing misconduct has therefore systematically eroded Sezzle’s business with Shopify merchants, allowed Shopify to dominate the BNPL market, and reduced (or eliminated) the BNPL choices and quality available to merchants and consumers alike,” Sezzle said in its lawsuit, which seeks an injunction and financial damages.