Amazon plunges into the Buy Now, Pay Later area.
The e-commerce giant is partnering with Affirm for its first ever partnership with an installment provider on the popular e-commerce site.
Affirm’s purchase option “buy now, pay later” will be available to certain Amazon customers in the US starting Friday with a broader rollout in the coming months, the companies said in a statement. The partnership allows Amazon customers to split purchases of $ 50 or more into smaller monthly installments.
Affirm’s stock rose up to 48% on the news Friday after close of business, adding more than $ 8 billion to its market cap and later leveling off about 33%. Amazon shares were unchanged.
Friday’s partnership is the latest sign of the booming credit market as younger consumers turn to these alternative lines of credit. In early August, Square jumped into the world with a $ 29 billion deal to buy Australian fintech Afterpay.
So-called installment loans have existed for decades, which were used in the past for large purchases such as furniture. Online payment providers and fintechs are competing to launch their own version of “Pay Later” products for online items in the low hundred dollar range.
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Affirm is one of the most famous installment payment options. It works with more than 12,000 dealers, including Peloton and Walmart.
PayPal, Klarna, Mastercard and Fiserv, American Express, Citi and JP Morgan Chase all offer similar credit products. Apple plans to launch installment loans in partnership with Goldman Sachs, Bloomberg reported last month.
Affirm said that some of the Amazon customer loans have interest, but others are at 0% APR. Other installment payment options are available on Amazon via credit cards.
“By partnering with Amazon, we’re bringing the transparency, predictability and affordability that Affirm offers today to the millions of people who shop on Amazon.com in the US,” said Eric Morse, Affirm’s senior vice president of sales Explanation . “Affirms’ alternative to credit cards offering also offers more payment options and flexibility that consumers want from Amazon.”