Amazon and Affirm have joined forces to introduce a new buy now, pay later (BNPL) option for Amazon Pay customers. With the integration of Affirm’s technology into Amazon Pay, merchants can now offer customers flexible payment options, eliminating the need for additional standalone installment options, as well as expanding the convenience and accessibility of online shopping. The partnership builds upon Affirm’s initial exclusive collaboration with Amazon, which began in August 2021. “Extending Affirm to vendors using Amazon Pay is a move that will help merchants provide more payments flexibility to their customers and a reach of over 300 million Amazon customers,” said Ben Danner, Senior Analyst of Credit and Commercial at Javelin Strategy & Research. By providing diverse payment options, merchants can cater to a wider range of customers’ preferences, potentially enhancing their competitive edge in the market. Affirm enables customers to use BNPL for relatively small-value purchases, which positions it well for e-commerce. “With an e-commerce average order value of $110 in the U.S., Affirm’s positioning at $50 or more for a BNPL loan will be a sweet spot for Amazon,” Danner said. BNPL’s selling point to merchants is that customers will make larger purchases if they can finance them interest free.

Therefore the cut merchants pay to BNPL companies is more than made up for by an increase in sales. According to Affirm, BNPL provides an 85% increase in average order value. The partnership between Amazon and Affirm is expected to bring significant benefits to both merchants and customers. It also follows in a long line of other such partnerships.

But with its huge size and customer base, the partnership with Amazon that BNPL has become a standard way of paying for products and is no longer a niche financial product. It will be interesting to see if BNPL produces an uptick in sales at Amazon, as expected.

By Josh Einis
Jun 13, 2023 00:00
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