$SEZL

The new rules proposed by New York Governor Kathy Hochul for the BNPL sector carry both short-term risks and long-term strategic changes for leading players in the sector such as SEZL.
The bill aims to ban excessive fees and limit late fees. Although the main revenue item of BNPL companies is commissions received from merchants, late fees are also an important item contributing to profit margins. This limitation could directly pressure Sezzle’s profitability in the New York market.
The new rules bring a mandatory risk-based credit assessment that will measure borrowers’ repayment capacity. One of BNPL’s biggest attractions is fast and easy approval processes. Making credit checks harder could lead to a decline in Sezzle’s approved transaction volume (and therefore its revenues).
New York is a very large market. Building a consumer dispute and refund mechanism at credit-card standards, bringing data privacy infrastructure up to New York standards, and licensing processes could mean a serious additional operational cost for Sezzle.
Since the BNPL sector in the U.S. is not yet fully regulated at the federal level, New York’s pioneering step could set a precedent for other states and spread legal/regulatory pressure across the country.
On the other hand, strict regulations usually wipe out smaller and weakly capitalized companies from the market. Large players like SEZL, $AFRM, and $KLAR have the financial strength to absorb these costs. In the long term, this may allow Sezzle to increase its market share in New York.
Sezzle CEO Charlie Youakim recently stated that they are considering obtaining a direct industrial bank license in Utah in order to avoid these complex state-level regulations. If Sezzle gets this license, it could bypass many state-based regulations and move into direct lender status.
In these kinds of situations, Wall Street thinks “sell first, research later.” SEZL may get through this shock, but first, short-term negative pressure looks very likely.
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