Woman using credit card at home

Amazon Validates BNPL Market with Affirm Deal

Amazon Will Offer Installment Payments Through Affirm

Amazon (AMZN) is getting into the buy-now, pay-later market, inking a deal with Affirm (AFRM) to let customers pay off purchases of $50 or more in installment payments. It is the first time Amazon is partnering with a buy-now, pay-later platform, although the company does already offer installment payments on some items it sells.

The ecommerce giant is entering the space at a time when demand to pay in installments is growing, particularly among younger shoppers. These customers tend to be wary of credit cards with high interest rates and prefer to make interest-free payments over a short period of time. Amazon and Affirm are testing the payment method with select customers and plan to roll it out more broadly in the coming months.

Affirm Gets a Lift

The deal was a huge win for Affirm, which has emerged as one of the leaders in the buy-now, pay-later market. The company, which went public in January and is run by PayPal co-founder Max Levchin, has seen rapid growth. Last fiscal year revenue increased 93% year-over-year and the company is forecasting 64% growth in 2021.

Affirm has 5.4 million active consumers, which is a 60% increase from last year. At the same time the size of the transactions on its platform increased 10% and the number of merchants nearly doubled. Walmart (WMT) and Peloton (PTON) are two of Affirm’s customers.

Competition Heats Up

Affirm’s partnership with Amazon sent Affirm shares up more than 40%. Despite the win, Affirm faces some formidable competition in the installment payments space. Rival Afterpay (AFTPY) was recently acquired by Square (SQ) for $29 billion, and Klarna is valued at close to $46 billion. In comparison, Affirm is now valued at around $25 billion. There is also talk that Apple (AAPL) and Goldman Sachs (GS) are partnering to create an installment payment service.

The buy-now, pay-later market is heating up as consumers embrace this interest-free way of paying off their purchases. With Amazon’s backing, Affirm stands to gain ground in a highly competitive space.

Things are changing daily within the financial world. Sign up for the SoFi Daily Newsletter to get the latest news updates in your inbox every weekday.

Sign up

Please understand that this information provided is general in nature and shouldn’t be construed as a recommendation or solicitation of any products offered by SoFi’s affiliates and subsidiaries. In addition, this information is by no means meant to provide investment or financial advice, nor is it intended to serve as the basis for any investment decision or recommendation to buy or sell any asset. Keep in mind that investing involves risk, and past performance of an asset never guarantees future results or returns. It’s important for investors to consider their specific financial needs, goals, and risk profile before making an investment decision.
The information and analysis provided through hyperlinks to third party websites, while believed to be accurate, cannot be guaranteed by SoFi. These links are provided for informational purposes and should not be viewed as an endorsement. No brands or products mentioned are affiliated with SoFi, nor do they endorse or sponsor this content.
Communication of SoFi Wealth LLC an SEC Registered Investment Adviser
SoFi isn’t recommending and is not affiliated with the brands or companies displayed. Brands displayed neither endorse or sponsor this article. Third party trademarks and service marks referenced are property of their respective owners.

All your finances.
All in one app.

SoFi QR code, Download now, scan this with your phone’s camera

All your finances.
All in one app.

App Store rating

SoFi iOS App, Download on the App Store SoFi Android App, Get it on Google Play

ABOUT Meg Richardson Meg Richardson is a writer specializing in markets, technology, and personal finance. She loves breaking down seemingly complex ideas and making them readable and interesting for everyone. She holds an MFA in writing from Columbia University. When she is not writing about finance, she enjoys running in Central Park and drawing cartoons.

TLS 1.2 Encrypted
Equal Housing Lender