Sezzle v. Shopify: Court Finds Shopify Possesses Monopoly Power, Case Moves to Substantive Phase

According to a recent report by Ebrun, the lawsuit filed by U.S. fintech company Sezzle against Shopify has seen a new development.

Sezzle has issued an official statement outlining the court's ruling: Sezzle's core claims of monopoly and trade restraints are allowed to proceed. This means the case, where Sezzle accuses Shopify of violating antitrust laws by unfairly favoring its own BNPL (Buy Now, Pay Later) service to the detriment of Sezzle's business, will now move into the substantive litigation phase.

Sezzle is a BNPL payment platform that allows consumers to make interest-free installment payments on e-commerce sites, charging merchants a per-transaction fee. Between 2019 and 2021, Sezzle's transaction volume on the Shopify platform grew rapidly, and the number of Shopify stores integrating Sezzle tripled.

Shopify is a global leader in independent e-commerce website builders, providing merchants with a full suite of tools from store setup to payments and logistics. In May 2020, Shopify announced its own BNPL product, Shop Pay Installments, which officially launched in June 2021.

Sezzle alleges that since then, Shopify has engaged in a series of "artificial barriers" to systematically suppress third-party BNPL competitors on its platform, including:

burying Sezzle and other BNPL options deep within multiple layers of the checkout process, effectively "hiding the options"; redirecting users who click the "Sezzle Buy Now, Pay Later" button to the Shop Pay Installments page instead of Sezzle's payment page; starting in June 2022, imposing an additional 1%-2% "third-party payment fee" on merchants using third-party BNPL services (including Sezzle); no longer providing Shopify order numbers for transactions completed via Sezzle, disrupting merchant reconciliation; disabling Sezzle's core technical feature (inventory hold); and forcing Sezzle's checkout icon to use a low-resolution version while Shop Pay uses a high-resolution icon.

Consequently, Sezzle filed a lawsuit on June 9, 2025, alleging that Shopify violated the Sherman Antitrust Act, the Clayton Act, and Minnesota's antitrust and deceptive trade practices laws. Shopify, represented by its legal counsel, has responded. In a motion to dismiss filed last September, Shopify argued that most of Sezzle's complaints were essentially dissatisfaction with certain features of the Shopify platform that did not benefit Sezzle's business.

Shopify's core defense is that all of Sezzle's allegations are essentially "displeasure over losing business," not actionable antitrust violations; Shopify "has no duty to design its products to benefit its competitors"; antitrust laws protect competition, not competitors; and Sezzle's complaints about the checkout flow, inventory hold, and order numbers essentially demand that Shopify provide assistance in a manner preferred by Sezzle.

Subsequently, the judge held oral arguments on this motion to dismiss in December of last year. On May 11 of this year, the court ruled on Shopify's motion to dismiss: it allowed Sezzle's core claims to proceed, including monopolization and attempted monopolization claims under Section 2 of the Sherman Act, unlawful restraint of trade claims under Section 1 of the Sherman Act, parallel claims under the Minnesota Antitrust Act of 1971, and claims under the Minnesota Deceptive Trade Practices Act. The court dismissed Sezzle's claim of unlawful tying under Section 1 of the Sherman Act and the corresponding portion of the state antitrust claims.

The court explicitly found that Shopify possesses monopoly power in two relevant markets: in the U.S. market for "drag-and-drop e-commerce platforms," Shopify has a market share of 70% (including large clients) to 95% (excluding custom clients); by 2024, Shop Pay Installments accounted for approximately 75-85% of all BNPL transactions on the Shopify platform.

Furthermore, the court found that Sezzle plausibly alleged that Shopify's "counterintuitive checkout page" (where users clicking "Sezzle Buy Now, Pay Later" are redirected to Shop Pay) and the "third-party payment penalty fee" (the additional 1%-2% charge on merchants using third-party BNPL) constitute anticompetitive conduct.

The court dismissed Sezzle's unlawful tying claim under Section 1 of the Sherman Act, finding that Sezzle failed to plausibly allege that Shopify "forced" merchants or consumers to use its payment processor.

It is reported that the case is currently still being heard in the U.S. District Court for the District of Minnesota. This recent court ruling is a procedural matter and does not constitute a finding of liability against Shopify.