Amazon and Affirm extend partnership to Canada to boost sales, bolster market share

Article by Jaime Toplin | Sep 23, 2022

The news: Amazon will let shoppers in Canada pay using buy now, pay later (BNPL) provider Affirm on both its English- and French-language sites within the next month, per a press release—building on the brands’ August 2021 US partnership. Shoppers can apply and, if approved, finance purchases over $50 in monthly installments.

Why it matters: BNPL is on a tear in the Canadian market.

BNPL made up just 3% of Canada’s ecommerce transactions in 2021, per FIS. But despite credit cards’ popularity in the market, nearly one-fifth (17%) of credit cardholders in the market would consider BNPL for a large purchase in lieu of their card, per JD Power.
And there’s ample room to expand. More than one-third of Canadians are familiar with BNPL, per the Financial Consumer Agency of Canada. If awareness translates into use, it’ll drive gains: Growth in the market hit 30% annually as of July 2021, per data cited by Interac, in part due to rising popularity among millennial and Gen Z shoppers as they gain spending power.

Amazon’s opportunity: Bringing BNPL into the fold could ensure that Amazon doesn’t lose sales as the payment method gets more popular in Canada.

By accepting BNPL—rather than avoiding third-party tie-ups, as it’s historically done—Amazon is ensuring that customers who want to use BNPL don’t leave for a rival retailer like Walmart, which developed a BNPL solution for its co-brand users in Canada. This can help Amazon avoid attrition, build long-term loyalty, and generate sales.

Affirm’s opportunity: Partnering with Amazon can help Affirm maintain a strong market positioning in Canada.

Affirm Canada—formerly known as PayBright—holds the majority of the Canadian BNPL market. And it’s growing quickly: GMV surged 116% annually in Q2 2022, per the company’s earnings, thanks to partnerships with players like Clover.
But competition is nipping at its heels. Block-owned Afterpay, which is Affirm Canada’s closest competitor, recently let all Square sellers in Canada offer Afterpay as a payment method—a major expansion in the market. Other providers, including Klarna and major domestic banks, are also bolstering their offerings in Canada.

Canadian ecommerce is set to jump 15%, reaching CA $87.16 billion ($64.98 billion) this year, and it will expand its reach to 17.2% of total retail by 2026, per our forecasts. Partnering with the market’s largest etailer could help Affirm accelerate its growth and crowd out the competition in a burgeoning sector, giving it a lasting advantage in the market.