- Affirm said on Wednesday it will power Shopify’s buy now, pay later product, Shop Pay Installments, set to launch later this year.
- The partnership dramatically expands Affirm’s reach to US consumers looking for an alternative to credit cards.
- Shopify has been on a product-launching spree, with a focus on ways to boost sales for its merchants.
- Offering a buy now, pay later option like Affirm can help retailers convert browsers to buyers online.
- Visit Business Insider’s homepage for more stories.
Shopify has been on a product-launching spree recently, moving beyond its e-commerce enabling software and eyeing more consumer-facing products.
In early May, it released a consumer-shopping app. Later that month it announced plans to roll out a new buy now, pay later feature for its merchants called Shop Pay Installments, set to go live later this year.
On Wednesday, Affirm said that it will be Shopify’s exclusive partner powering the buy now, pay later offering.
“We’re super excited to be part of Shopify’s growth,” Max Levchin, founder and CEO of Affirm, told Business Insider.
Shopify powers over one million merchants, more than half of which are based in the US. That opens up a huge market of retailers, and in turn, shoppers, that Affirm will now have access to.
“Tens of millions of US consumers are going to be exposed to Affirm, which is a huge leap for us in terms of just being visible,” Levchin said.
Currently, Affirm is available at check out for more than 6,000 merchants. Prior to the announcement, Affirm was available to Shopify merchants through its app store. But retailers needed to integrate Affirm’s tech, which, at times, was more complicated.
By powering Shop Pay Installments, the integration on the merchant side will be more seamless, Levchin said.
“You just flip the switch and off you go,” Levchin said. “It eliminates all forms of complexity and makes it a choice for the merchant that’s super easy.”
Affirm’s brand will still be featured on Shop Pay Installments
Often, fintechs will sell their tech to other companies, letting them rebrand it themselves. Startup Bread, for example, does this with its buy now, pay later tech, selling it directly to retailers.
But with this partnership, Affirm’s brand will still be featured on the Shop Pay Installments product. In fact, keeping Affirm’s name was a sticking point for Levchin.
“We get full credit and visibility. We actually insist. Part of the adherence of our mission is that people need to know who their heroes are,” he said. “We are bringing transparent and honest financial products, and people need to know that it’s us who are doing it.”
As they grow in stature, buy now, pay laters are increasingly considering their brand awareness. For example, Klarna recently announced a loyalty program for customers.
Valued at $2.9 billion, Affirm has raised $800 million to-date from investors including Andreessen Horowitz, Lightspeed Venture Partners, and Spark Capital.
Levchin, who was a cofounder of PayPal, has been vocal about Affirm’s ‘mission of honest finance,’ offering consumers a more transparent alternative to credit cards. As part of that, Affirm has never charged late fees.
“We think it is incredibly important that we be transparent with our merchants and buyers,” Kaz Nejatian, vice president and general manager of financial solutions at Shopify, told Business Insider in emailed comments.
“Like Affirm, we believe that products that hide behind late fees and hidden fees are bad for everyone,” he added.
And Levchin says Affirm’s commitment to working with its users that are unable to pay has been key to its success during recent months.
“That’s the brand Affirm stands for. We will work with you and treat you like a grown up,” Levchin said. “Part of that requires the end customer knowing that they’re dealing with Affirm, so we really have never white labeled.”
Offering buy now, pay later can help merchants boost sales
Shopify’s consumer-focused products — like its Shop app — are all about driving more business to the network of merchants running on its platform. And Shop Pay Installments is no exception.
Offering a buy now, pay later product at checkout can help retailers increase sales and convert online browsers to buyers. Affirm, which already partners with brands like Casper and Peloton, says that it can increase average order values by 85% and up repeat purchase rates by 20%, as of May this year.
“We’re looking forward to partnering with Affirm to power Shop Pay Installments in the U.S. for eligible merchants, helping them give their customers better shopping experiences while boosting their overall sales,” Nejatian said.
Affirm, in addition to other buy now, pay later players like Afterpay and Klarna, continue to see a growing number of consumers sign on for their products, often marketed as a more flexible alternative to credit cards.
“Today’s consumers want more flexibility when they’re shopping and making purchasing decisions,” Nejatian added. “By giving our merchants the ability to offer more payment choice and flexibility, we’re helping them meet their customers’ wants and needs.”
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