Amazon Partners with Affirm to Offer Buy-Now-Pay-Later Option

Joining a growing trend for retailers offering similar options

On Friday, Amazon and Affirm announced a new partnership that will allow Amazon customers to use a new buy-here-pay-later option. Affirm is a payment network that helps retailers offer flexible payment solutions for customers who want to pay for their purchases over time. According to an August 27, 2021 news release, select Amazon shoppers will have the option to break the total cost of purchases over $50 down into monthly payments through Affirm. Customers are subject to approval, and at checkout, the customers will see the total amount due. Affirm will not charge late or hidden fees.

“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.,” said Eric Morse, senior vice president of sales at Affirm. “Offering Affirm’s alternative to credit cards also delivers more of the payment choice and flexibility consumers on Amazon want.”

Image courtesy of Amazon and Affirm

About Affirm

Affirm has partnered with well-known brands including Walmart, Delta Vacations, Bonobos and Peloton. They cite a 20% repeat purchase rate, and they’ve had more 6.2 million shoppers and more than 17 million purchases in their premium network. Firms like Amazon have flexibility with their payment solutions, including:

  • Virtually every price point
  • Ability to split payments across different time frames, including longer terms like 18, 24 or 36 months
  • Ability to charge interest or off interest-free plans
  • Omnichannel options

Partnering with companies like Affirm can help retailers minimize risk since Affirm handles chargebacks and fraud, while Affirm pays the retailer up front for purchases.

Buy-now-pay-later trends

The buy-now-pay-later (BNPL) payment solution is a growing trend in the retail industry. Vendors like Affirm, Afterpay, Klarna and PayPal credit allow customers to make purchases and then pay for them over time. Those purchases are linked to a debit card or bank account, and the payments are automatically taken out of the account on the designated dates. The BNPL vendors also send reminders to let customers know their payments will be due soon.

Old Navy is a popular retailer who now offers a buy-now-pay-later payment solution. Old Navy works with Zip who acquired Quadpay in 2020. Through Zip, shoppers who don’t want to pay for their entire purchase up front can pay for their items in four equal payments with 25% of the cost due up front and the remainder due over six weeks. When the customer checks out and selects Zip payments, the app displays how much is due and when.

CNBC reports that BNPL payment solutions are popular with younger generations as an alternative to credit cards. It is a particularly popular way to make big ticket purchases like computers and other electronics without running up the balance on a high interest credit card. CNBC also says that many of the BNPL platforms don’t charge interest to consumers; instead, they make most of their money from retailer fees and occasionally late fees (Affirm does not charge late fees).

Insider Take

With retailers like Walmart on board with BNPL solutions, it was inevitable that Amazon would partner with a BNPL vendor to make larger purchases accessible to more customers. This is particularly true if Affirm does all the work, and Amazon assumes none – or very little – risk. Amazon continues to benefit from Prime memberships while also potentially increasing sales and return customers with this new payment option.