Affirm announced this week that it is expanding its partnership with e-commerce giant Amazon, allowing eligible U.S. consumers to buy goods over $50 on Amazon and use installment payments, a service previously only available to certain Affirm customers.
In addition, Amazon receives multiple warrants for AfirmA common stock, making it the only third-party Amazon provider, not credit cards and BNPL service providers in the United States. Affirm will also be built into AmazonPay as a payment option.
The partnership is a win-win for Amazon and Affirm.
Affirm’s active customers more than doubled last quarter, to 8.7 million, while the number of merchants on its platform ballooned to 100,000 from 6,500 a year ago.
Among retailers, Affirm’s products have proven to be sticky. Over the past 3 years, they have maintained a retention rate of more than 100% in US dollars. All business groups remain and continue to grow on the platform.
Affirm addresses the pain point of consumers being able to buy goods for a fixed amount without paying deferred interest, hidden fees, or penalties. This allows consumers to pay over time, rather than paying entirely for the product.
Affirm forecast revenue in the current quarter of $320 million to $330 million, above expectations of $296.09 million. This is thanks to the BNPL market, which has set off a global boom in the past two years.
In addition to Amazon’s installment deal with Affirm Holdings, Apple has previously partnered with Affirm Holdings’ Payment service PayBright, Apple Store in Canada allows consumers to buy iphones, ipads and Macs on a “buy now, pay later” basis. Samsung is also working with PayBright to provide a “buy now, pay later” service in Canada. Square has acquired Afterpay, an Australian financial startup. Provide buyers with purchase before payment and small payment installment consumption experience.
Taken together, the BNPL market may be the next outlet for these fintech giants. By July this year, the BNPL market had diverted as much as $10bn in annual revenues from banks, according to McKinsey.