Amazon, Affirm team for installment option
Pay-later services growing in popularity
SAN FRANCISCO — Amazon is teaming with payments company Affirm to offer online shoppers a buy now, pay later option that does not involve credit cards.
San Francisco-based Affirm Holdings Inc. announced Friday that its flexible payment service will soon be available on Amazon.com.
The news sent Affirm’s stock up 47% Monday.
Affirm said Amazon customers would be able to use its service on purchases of $50 or more — including items such as furniture, home goods, electronics and fashion — and pay in monthly installments. Once approved, customers will be able to see the total purchase price upfront — and they won’t be charged any late or hidden fees, the company said.
The service is being tested with select customers now, Affirm said, and will become more broadly available to shoppers in the coming months. Certain purchases — including those from Whole Foods Market and Amazon Fresh, and certain digital purchases such as movies and books — will not be eligible, according to Affirm.
“Amazon is always looking to add flexible payment options,” an Amazon spokeswoman said, “and Affirm does just that by offering transparent pay-over-time solutions that customers can choose based on their needs.”
Buy now, pay later services have become an increasingly popular option among consumers. And the partnership follows another giant deal last month: Square Inc., the payments firm run by Twitter chief executive Jack Dorsey, agreed to acquire Afterpay for $29 billion. That deal will open the installment option to millions of small businesses that process their credit card transactions through Square’s app.
Affirm has already become partners with 12,000 merchants, including Walmart and Peloton. Peloton accounted for 30% of the company’s total revenue in the first fiscal quarter of 2021, according to an August research report from FT Partners, an investment banking firm focused on financial technology. That was up from 14% in the same quarter a year earlier.
Amazon’s partnership with Affirm is its first with a buy now, pay later provider in the United States; it works with Zip in Australia, where these options are already more established. Amazon had already provided monthly payment plan options on its own for select customers buying certain products. It also offered installment programs for customers with the Amazon.com Store Card, the Amazon Rewards Visa Card, and eligible Citi credit card members.
Installment plans are popular with retailers because they encourage customers to spend more money. And they enable customers with insufficient funds or credit at the time of purchase to walk out of a store — or check out online — with the items they want.