FinTech: Affirm and Shopify Tie Up To Offer Shopping on Installments
Buy-Now-Pay-Later (BNPL) will soon be available in the U.S. as Shop Pay Installments.
Online shoppers will soon have access to a new credit facility courtesy of Affirm, the credit startup run by PayPal (NASDAQ: PYPL) co-founder Max Levchin, and eCommerce giant Shopify (NYSE: SHOP). Best of all, the program, dubbed Shop Pay Installments, will be interest-free as well as zero-fee. (CNBC)
Shopify merchants in the U.S. that want to offer a BNPL facility to their customers may opt for Affirm’s solution.
Shopify’s BNPL: How it would work
Approved shoppers, at checkout, could opt to split their total purchase bill into four equal, bi-weekly, interest-free payments.
Affirm will extend the installment facility. It will pay to the merchant the full purchase amount, less fees, upfront. Affirm will not charge the customer any additional fees.
Thereafter, Affirm will handle payment collection from the customer.
“With the acceleration of online spending, many small businesses must reinvent themselves. This includes embracing the rising importance of e-commerce strategies and meeting consumers, particularly young shoppers, where they are,” said Levchin, Founder and CEO of Affirm in a statement.
“We can help merchants seamlessly enable a pay-over-time option at checkout,” Levchin added. “In doing so, we’re helping them reach new customers, particularly Gen Z and Millennials, who are looking for more transparent and flexible ways to pay.”
The two companies will soon begin to test Shop Pay Installments and expect to roll it out later this year.
The virus outbreak has worked to the advantage of Shopify and Affirm, with both seeing a surge in online users.
Affirm has seen a 40% increase in merchant signings from March 1 to April 30, compared to the first two months of the year. Its current BNPL offering is already available at 6,000 U.S. merchants and used by 5.6 million customers.
“More entrepreneurs than ever before are trying out Shopify with new store creations on our platform growing 62% between March 13 and April 24 compared to the 6 weeks prior,” said Amy Shapero, Chief Financial Officer, Shopify, on a conference call in May.
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