Shopify Loses Bid to Toss Sezzle Lawsuit

Why It Matters

The outcome could force Shopify to unbundle its payment product, altering fee structures for millions of merchants and setting a precedent for antitrust enforcement in the fast‑growing BNPL market.

Key Takeaways

• Judge finds Sezzle's antitrust claims against Shopify plausible
• Shopify retains monopoly power claim in e‑commerce platform market
• Partial dismissal leaves Shop Pay Installments dispute unresolved
• Case highlights growing regulatory scrutiny of BNPL services
• Outcome could reshape merchant fee structures on Shopify

Pulse Analysis

The buy‑now, pay‑later (BNPL) sector has exploded in the past five years, attracting fintech startups and traditional retailers alike. Shopify, the Canadian‑origin e‑commerce platform that powers over 4.4 million merchants worldwide, entered the space in 2021 with Shop Pay Installments, positioning itself as both a marketplace and a payment provider. This dual role has drawn the attention of antitrust regulators, who worry that platform owners can leverage control over storefront infrastructure to favor their own financial products. Sezzle, a Minnesota‑based BNPL challenger, sued Shopify in June 2025 alleging such conduct.

In a May 13 ruling, U.S. District Judge Eric Tostrud concluded that Sezzle had plausibly alleged monopoly power in both Shopify’s drag‑and‑drop e‑commerce platform market and the BNPL aftermarket that runs on Shopify‑hosted stores. While the judge dismissed part of Shopify’s motion to strike the claim that the company coerced merchants into using Shop Pay Installments, he left the core antitrust allegations intact, signaling that the case will proceed to discovery. The decision underscores that courts are willing to entertain claims that platform owners can condition access to essential tools on the adoption of their own payment services.

The outcome of this litigation could reverberate across the broader BNPL ecosystem. If Sezzle ultimately proves that Shopify abused its market dominance, regulators may impose stricter separation between platform services and proprietary financing products, forcing merchants to choose from a wider array of third‑party BNPL options. Conversely, a dismissal could embolden other e‑commerce giants to bundle payment solutions without fear of antitrust liability. For merchants, the case highlights the importance of negotiating transparent fee structures and maintaining flexibility to integrate alternative financing providers.