Merchant Accounts Payable

9 Months Ended

Sep. 30, 2022

Payables and Accruals [Abstract]

Merchant Accounts Payable

Merchant Accounts Payable

Sezzle offers its merchants an interest bearing program in which merchants may defer payment from the Company in exchange for interest. Merchant accounts payable in total were $83,763,032 and $96,516,668 as of September 30, 2022 and December 31, 2021, respectively, as disclosed in the consolidated balance sheets. Of these amounts, $68,446,039 and $78,097,910 were recorded within the merchant interest program balance as of September 30, 2022 and December 31, 2021, respectively.

Effective August 1, 2022, all deferred payments retained in the program began bearing interest at a fixed rate of 3.8% on an annual basis, compounding daily. Prior to that, deferred payments retained in the program bore interest at the Secured Overnight Financing Rate (“SOFR”) plus three percent on an annual basis, compounding daily, between March 1, 2022 and July 31, 2022, and LIBOR daily (3 month) rate plus three percent on an annual basis, compounding daily before that. The weighted average annual percentage yield was 3.87% and 3.18% for the three months ended September 30, 2022 and 2021, respectively, and 3.45% and 3.23% for the nine months ended September 30, 2022 and 2021, respectively. Interest expense associated with the program totaled $646,507 and $620,353 for the three months ended September 30, 2022 and 2021, respectively, and $1,835,044 and $1,666,420 for the nine months ended September 30, 2022 and 2021, respectively.

Deferred payments are due on demand, up to $250,000 during any seven day period, at the request of the merchant. Any request larger than $250,000 is honored after 7 days. Sezzle reserves the right to impose additional limits on the program and make changes to the program without notice or limits. These limits and changes to the program can include but are not limited to: maximum balances, withdrawal amount limits, and withdrawal frequency.