Sezzle files for Sezzle Bank and drops the Utah plan

Sezzle Inc. filed on October 22, 2026 to charter Sezzle Bank, N.A. with the Office of the Comptroller of the Currency (OCC) and applied to the Federal Deposit Insurance Corporation (FDIC) for deposit insurance, the company said. Having watched Buy Now, Pay Later (BNPL) firms rent a bank rather than own one, the charter choice is the news: Sezzle dropped a plan to seek a Utah industrial loan company (ILC) license, which would have left the parent outside Federal Reserve holding-company supervision.

If approved, Sezzle Bank would offer insured deposits, checking, savings and credit to digitally native consumers. Sezzle said the filing only starts the process, customers see no change at this time, and existing lending partners stay in place. Sezzle said regulatory approvals are not guaranteed. The OCC would examine safety and soundness, consumer compliance, the Bank Secrecy Act and anti-money laundering. Sezzle said it will apply to become a bank holding company (BHC) under the Federal Reserve.

Why the Utah license lost

Chief Executive Officer and Executive Chairman Charlie Youakim told Payments Dive in August that BNPL laws in New York, Illinois and Oregon, and criticism of ILCs from banks and consumer groups, drove the change. "We're good with the federal rules," said Charlie Youakim, chief executive officer and executive chairman at Sezzle. "What I'm less comfortable with is politicians in different states." On the alternative, he said: "Let's just go straight to the most robust solution, which is a national charter."

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Payments Dive later reported the October filing as that pivot, away from a license Sezzle had planned to seek from Utah regulators. In the release he said the application "reflects our commitment to operating under the highest standards of federal oversight."

Rivals still want an ILC

Affirm Holdings said in January 2026 that it had applied in Nevada, and to the FDIC, for Affirm Bank as an ILC. Its annual report cites less reliance on partner banks, lower funding costs and tighter control of products, and warns those gains "may not be realized in the manner or to the extent we anticipate," Digital Transactions reported. Klarna applied in July 2026 to Utah and the FDIC for Klarna Bank USA. PayPal Holdings sought a Utah industrial-bank license in December 2025, and Block already runs Square Financial Services, a Utah ILC. The peer set is keeping the exemption Sezzle is leaving.

Coverage on this desk already includes Revolut's US bank charter, with retail foreign exchange fenced off, Chime's agreement to buy its partner bank, Increase's move onto an FDIC-insured balance sheet, and Enova's withdrawal from the Grasshopper Bank applications.

Two charters, two supervisors

An ILC is a state-chartered, FDIC-insured bank. The FDIC is the primary federal regulator for these state nonmember banks and applies the same statutory factors it uses for other banks, FDIC Chairman Jelena McWilliams said on December 15, 2020. Congress in 1987 excluded ILC parents from Federal Reserve supervision solely because of that control, and the FDIC's 2020 rule fills part of the gap with parent commitments the agency can enforce. A national bank is chartered by the OCC under the National Bank Act. The OCC licensing manual requires Federal Reserve approval for the owner to acquire the new bank, and become a BHC, before the OCC grants final approval. Sezzle said it will file that holding-company application, so Sezzle Bank stays a proposal until the sequence finishes.

Hoang Nguyen, an analyst at TD Cowen, called the switch "a smart move" because an OCC charter offers "protections to be able to export rates and different product features to all the states without the ability of states to challenge it."

WebBank keeps the loans

The loans stay on the contract already signed. On August 12, 2026 Sezzle and WebBank, a Utah-chartered industrial bank, restated their program, the company said in a Form 8-K. WebBank remains the exclusive originator through September 27, 2029. The restatement raised Sezzle's minimum tangible net worth covenant from $12 million to $100 million and added SezzleCash and Sezzle Send. WebBank holds those newer loans to maturity, initially up to $30 million, and may lift the cap to $150 million. Youakim has said checking waits until Sezzle operates its own bank.

Three decisions still have to line up: a Federal Reserve order on the holding company, which the OCC manual places ahead of a final charter, and FDIC deposit insurance. Until they arrive, WebBank is the lender of record through September 27, 2029. For other BNPL operators the durable question is whether state statutes now cost enough to justify Fed supervision of the parent. Affirm, Klarna and PayPal are still choosing the ILC exemption. Sezzle has chosen the national bank.

This article is for information only and is not investment, legal or regulatory advice.