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The growth of this BNPL ASX share has been outpacing Afterpay (ASX:APT)

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The values of buy now, pay later (BNPL) ASX shares have soared over the last year.

After bottoming out at $1.05 in the March 2020 COVID-19 crash, Zip Co Ltd (ASX: Z1P) shares have surged over 650% to $7.95 at the time of writing. And at one point in late August, the Zip share price even touched a record high of $10.64.

And then there’s Afterpay Ltd (ASX: APT). Since falling to a low of $8.01 in March, the Afterpay share price has skyrocketed a whopping 1730% to $146.62. With a scarcely believable market capitalisation of well over $40 billion, it is now larger than Telstra Corporation Ltd (ASX: TLS) and Transurban Group (ASX: TCL), and might soon overtake Rio Tinto Limited (ASX: RIO).

But with companies like Afterpay hogging all the media spotlight, it’s easy to forget that there are many other companies trying to carve out a niche for themselves in the buy now, pay later space.

Over the last year, Sezzle Inc (ASX: SZL) shares have also been soaring higher – even outpacing Afterpay. The Sezzle share price was trading at just 35 cents last March, but has now climbed over 2300% to $8.50. And back in August, Sezzle shares peaked at a record high price of $11.83.  

What makes Sezzle different?

Like Afterpay, Sezzle gives consumers the ability to repay their purchases over four fortnightly instalments. Provided all instalments are paid on time, there are no interest or late fees charged to the customer. Instead, Sezzle makes its money by charging a small fee to the merchant.

The reason you may not have heard as much about Sezzle as Afterpay is that it is headquartered in Minneapolis and predominantly targets the North American market. It has been growing rapidly in the United States, driven by rising rates of online shopping spurred by COVID-19 lockdowns.

Sezzle has also been targeting global expansions into the Indian and European markets. It estimates the total retail market to be worth US$882 billion in India, and US$232 billion in Europe.

Recent news out of the company

Sezzle reported record results for the December 2020 quarter. Underlying merchant sales (UMS) through the payment platform increased 40.6% quarter on quarter and 205.4% year on year to US$320.8 million. Active customers were also well up, increasing by 24.5% quarter on quarter and 143.9% year on year to over 2.2 million. Active customer repeat usage was also up 89.8%. The company collected US$17.2 million in merchant fees for the quarter, a jump of 32.6% quarter on quarter and 195.6% year on year.

In the September quarter, the company reached its 2020 target of annualised run rate for UMS of US$1 billion (A$1.4 billion).

While this is a notable achievement for a rapidly growing company, it’s worth noting that Sezzle is still significantly trailing Afterpay, which reported underlying global sales (a similar metric to Sezzle’s UMS) for the September quarter alone of $4.1 billion.

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Rhys Brock owns shares of AFTERPAY T FPO,  ZIPCOLTD FPO and Sezzle Inc. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of ZIPCOLTD FPO. The Motley Fool Australia's parent company Motley Fool Holdings Inc. recommends Sezzle Inc. The Motley Fool Australia owns shares of and has recommended Telstra Limited. The Motley Fool Australia owns shares of AFTERPAY T FPO and Transurban Group. The Motley Fool Australia has recommended Sezzle Inc. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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