Buy now, pay later (BNPL) service provider, Affirm, saw its stock rise nearly 47 percent after the company announced its partnership with Amazon, which will enable shoppers to pay for purchases worth $50 or more in smaller installments.
The partnership is the first of its kind for Amazon and it builds on the eCommerce giant’s existing flexible payment offering, which it supports for select products sold on its platform.
“By partnering with Amazon, we’re bringing the transparency, predictability and affordability that Affirm provides today to the millions of people who shop on Amazon.com in the U.S.,” Affirm’s Senior Vice President of Sales Eric Morse said in a statement. “Offering Affirm’s alternative to credit cards also delivers more of the payment choice and flexibility consumers on Amazon want.”
Consumers will be able to use the BNPL option for making a wide variety of purchases, ranging from furniture and home goods to electronics and fashion. However, purchases made through Whole Foods and Amazon Fresh, as well as digital purchases such as eBooks and gift cards, will not be eligible.
At checkout, shoppers can expect to see their payment schedule, which could range from three to 48 months, as well the size of their payment and a potential interest rate of zero percent to 30 percent APR. In addition, buyers can choose to either set up automatic payments or make payments through the Affirm website or mobile app.
Amazon’s move to partner with Affirm follows similar moves by other major retailers tapping BNPL services such as Afterpay, Klarna and Affirm to appeal to younger consumers and improve their conversion rates. Walmart, a key competitor for Amazon, also offers installment payment options via Affirm.
Some of the major merchants Affirm works with include Casper, Dyson, Nordstrom, Peloton, Poshmark, VRBO, Williams Sonoma brands, Peloton and Casper. Overall, the company has partnerships with 12,000 merchants.
Growing consumer appetite for BNPL options is resulting in increased M&A activity and roll out of new services. Earlier this month, Square announced plans to acquire Affirm’s competitor Afterpay for $29 billion. Meanwhile, tech giant Apple is said to be working on its own BNPL service, which Goldman Sachs will support.