The news: Amazon partnered with buy now, pay later (BNPL) provider Affirm to offer customers a more flexible payment option, per a press release.
Why it's worth watching: Affirm is Amazon’s first direct US BNPL partner—before this, if customers wanted to pay for an Amazon purchase in installments, they needed to go through third parties. But the etail giant has toyed with BNPL services in other markets.
For example, customers can use Afterpay’s BNPL services on Amazon when shopping through the Afterpay app. But the Affirm-Amazon tie-up lets customers shop directly from Amazon and check out using Affirm.
Amazon has offered a proprietary BNPL option, Amazon Pay Later, for customers in India since April 2020, and it’s been widely successful: As of July 2021, Amazon Pay Later had amassed 2 million users and processed more than 10 million transactions. Although we expected Amazon to bring the solution to the US, the company likely went through Affirm instead to avoid added costs and lean on an existing BNPL customer base.
Affirm’s opportunity: Partnering with the largest ecommerce player in the US gives Affirm an edge against competitors.
Amazon’s benefit: The tie-up can help Amazon stay ahead of other merchants as BNPL rapidly grows into a necessary tool for merchants to offer customers. It can also increase payment flexibility, which might appeal to customers looking for noncredit ways to finance transactions.
Go deeper: To learn more about Affirm’s position in the BNPL space and what its partnership with Amazon might mean for competitors, check out The Buy Now, Pay Later Report.