Discover Invests US$30m - Plans for BNPL Network Solution

'Sezzle Inc. (ASX:SZL) (Sezzle or Company) is pleased to announce that it has entered into an agreement with DFS Services LLC (Discover), a subsidiary of Discover Financial Services (Discover), in which Discover will invest US$30 million into Sezzle, based on a per share purchase price of US$6.58 (AUD$8.83), which equates to total shares to be issued of 4,556,210. In addition to the investment and, subject to finalising a definitive commercial agreement, the parties propose to enter into an expanded partnership, including plans for a buy now, pay later network solution on the Discover Global Network, as well as a dedicated referral program introducing Discover credit and debit products to Sezzle’s consumer base.'

Who is Discover? 

Discover Financial Services is a bank operating in two distinct segments: direct banking and payment services.

The company issues credit and debit cards and provides other consumer banking products including deposit accounts, students loans, and other personal loans. It also operates the Discover, Pulse, and Diners Club networks.

The Discover network is the 4th largest payment network in the United States as ranked by overall purchase volume, and Pulse is one of the largest ATM networks in the country.'

My take

Good news for SZL shareholders after a difficult day yesterday. With reference to Discover, it appears to be an impressive partner - market cap of approximately 37b and shares up over 100% over the last 12 months. Perhaps a strategic move on SZL's behalf with the US listing anticipated to occur in the coming months? 

The agreement involves Discover investing at a share price of AUD$8.83. This should provide support to SZL's share price, which closed at 8.00 overnight. 

The BNPL industry continues to heat up... 

SZL has had a nice bump this morning (24% at time of writing) following the announcement of a partnership with Target in the US. This will obviously provide exposure to a good portion of the retail market - both in-store and online. 

"In its statement to the ASX, Sezzle advised it’s entered into a 3-year agreement with retailing giant, Target Corporation (NYSE: TGT). The deal follows Sezzle completing its proof of concept (POC) with Target, which looked at the feasibility of teaming up.

Under the new agreement, Sezzle’s platform will be available in-store and across Target’s digital platforms. This will allow customers to make purchases at Target and take up Sezzle’s interest-free payment plans.

The latest partnership is considered significant to Sezzle, as Target reported first-quarter earnings of US$2.1 billion last month. This was well up on the US$284 million the United States retailer achieved in the prior corresponding period when lockdowns were in full force.

Sezzle’s underlying merchant sales for the same period rose to US$375.1 million, well up on the US$119.4 million figure from the previous year."