Plaid, recently acquired by Visa for $5.3 billion, helps fintechs connect their customers to the banking system.

Sezzle, a fintech that offers interest-free installment purchase plans to 1.4 million consumers at online stores and physical locations, has tied up with Plaid. Sezzle’s customers can now connect (via Plaid) their financial accounts maintained with the traditional banks to the Sezzle platform. (News Break)

This will enable them to smoothly pay for their purchases as well as settle the platform’s installments.

Merchants and consumers alike have readily adopted Sezzle’s “buy now, pay later,” offering. It’s a payment solution that is in effect a short-term, interest-free installment plan.

It allows users to make immediate online purchases but pay for them in four equal, interest-free installments over six weeks.

Benefits for Sezzle

According to a statement, the tie-up between Plaid and Sezzle (ASX: SZL)  will also allow the latter’s customers to have more control over how their financial data is used.

Secondly, Sezzle’s customers’ payments may now be routed through the Automated Clearing House system instead of cards. This will help lower the costs of transacting on Sezzle.

“Plaid’s goal of making money more accessible for everyone aligns with our mission of financially empowering the next generation,” said Charlie Youakim, Executive Chairman and CEO of Sezzle.

He further said that the company is “excited” to work with Plaid on new products like Sezzle Up for customers.

The BNPL fintech notches up 1M customers

In February, Sezzle announced its achievement of one million customers across the United States and Canada.

Launched in 2016, it took the fintech all of three years to build a base of 500,000 customers. However, between August 2019 and February 2020, the fintech doubled that number to a million.

Plaid faces class-action suits

However, earlier this month, Plaid was served with two class-action suits that alleged the company violated the plaintiffs’ data privacy.

“Plaid exploits its ill-gotten information in a variety of ways, including marketing the data to its app customers, analyzing the data to derive insights into consumer behavior, and, most recently, selling its collection of data to Visa as part of a multi-billion dollar acquisition,” charged one of the suits. “Plaid has unfairly benefited from the personal information of millions of Americans and wrongfully intruded upon their private financial affairs.”

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