By Charlie Youakim, CEO of Sezzle
My life into e-Commerce started in parking with the launch of my first company’s mobile payment app. We launched this app on a test lot, and I still remember receiving our first merchant processing bill. I was in shock. We were paying 50 cents in payment processing fees for each $2 transaction!!
At Passport, we took that experience and used it to create mobile payment systems that helped parking operators effectively manage their parking systems and these excessive fees. We launched the parking industry’s first mobile wallet, where we allowed parkers to fund a $20 wallet and draw down upon it each time they parked. It was a simple solution that saved the city of Chicago millions. Instead of paying 35 cents per $5 transaction the city was paying 40 cents for the $20 wallet load, which could be used to park four times.
This system was a hit, and soon we were rolling it out in other major cities like Boston and Toronto. We were even able to enter into the transit industry by converting our app and wallet system into a bus and light rail payment system. The company continued to grow as our value proposition to these parking and transit authorities was spot on. They all wanted to launch mobile payment systems, but they wanted to do it cost-effectively. Passport offered that option and won over cities and transportation operators.
In 2016 I moved on from Passport and started my 2nd payments company, Sezzle. Sezzle’s initial goal was to bring more cost-savings to the masses. We had a plan to bring bank payments to the checkout to lower fees for merchants. Thousands of merchants we stung by the same high cost of processing that I noticed on my first Passport card invoice. We launched Sezzle with the idea that this pent-up demand would drive adoption.
Merchants were interested in the idea, but saving money was always item #5 or 6 on their to-do list. We continued to try to test the concept in different ways over the course of 4 months, but we eventually realized that we had to pivot.
What was always item #1 on these merchant’s list of to-dos?
So we flipped our value proposition. Instead of offering another form of debit payment with in-checkout bank payments, we decided to provide a form of payment similar to credit. We launched a reverse layaway system that we saw taking off in Australia. Sezzle evolved into a ‘pay later’ payment system. We allowed users to split their purchase into four equal interest and fee-free payments. This method gave consumers more purchasing power and allowed them to buy more today.
The value proposition to the merchant also changed. Now we were driving more sales. We were #1 on the to-do list!
It worked, and it’s continuing to work. We pivoted in June, launched in August and it’s been off to the races ever since.
Payments and e-Commerce are both fun places to be right now. It’s an ever-changing landscape of ideas at the edge of commerce.
It should be a fun ride for the next few years at Sezzle. We’ve got a great team in place, and we’re off to a great start. Stay tuned!