Seeking to increase their buy-now-pay-later services, Sezzle (ASX: SZL) is entering the neo-lending space in the United States through a partnership with Ally Lending, a lending division of Ally Financial (NYSE: ALLY), which offers payment plan loans up to USD $40,000.

The partnership will enable Sezzle to significantly increase the purchasing power of its BNPL customers by linking them to Ally Lending, which offers monthly fixed-rate installment-loans that extend up to 60 months in length.

“Our collaboration with Ally Lending enhances our customer financing offerings, making it possible for consumers to better manage their finances,” said Sezzle CEO, Charlie Youakim

“Ally’s dedication to its customers and commitment to innovation aligns with our own vision and culture – making this partnership a good fit for us.”

The BNPL service that will be offered by Ally Lending via Sezzle will be notably different to Sezzle’s existing service which allows customers to make 4 interest-free payments over 6 weeks for purchases up to $2,500.

Using Ally Lending which will manage the total loan book, customers will be charged interest on their loans, but the service will increase Sezzle’s product suite by assisting Americans through difficult times and a simple user experience for their existing 1.6 million customers in the US.

“We’re proud to partner with Sezzle to offer budget-friendly, responsible financing options, so consumers can feel more secure when making the purchases they need,” said Ally Lending President, Hans Zandhuis.

With Ally Bank being the leading online bank in the US, customers are able to apply for loans using a wholly digital application process where it has a customer-centric business model and one of the largest full-service automotive lenders in the country.

Through the 6 months ending 30 June 2020, the peak of the COVID-19 pandemic, Sezzle reported a 338% increase in underlying merchant sales to AUD $445.2m which delivered income of $30.1m to Sezzle but a net loss of $8.1m, which is relatively standard common amongst BNPL operators currently.

Commercial terms regarding how much Sezzle will earn from the partnership were not disclosed.