Affirm Expands Amazon Partnership As Buy Now Pay Later Surge Lifts Revenue
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Nov 10 – Affirm Holdings Inc said on Wednesday it had expanded its partnership with Amazon and reported quarterly revenue above Wall Street estimates, boosted by growth in active consumers and merchants on its buy now, pay later platform.
Affirm’s expanded partnership will allow all eligible U.S. purchases of $50 and more on Amazon to be split into simple monthly payments, which was earlier available to only select customers. read more
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Amazon will also receive multiple tranches of warrants to purchase shares of Affirm’s Class A common stock, the company said, adding that it would be the e-commerce giant’s only third-party, non-credit card, BNPL service provider in the United States through January 2023 as part of the amended agreement.
Additionally, Affirm will also be embedded as a payment method in Amazon Pay’s digital wallet in the country.
The BNPL industry took off last year, as homebound consumers opted for online shopping and used pay later options to make purchases easier on their wallets.
BNPL firms charge merchants a fee for offering their customers small, point-of-sale loans which are paid back in interest-free installments, bypassing credit checks in the process.
The company now expects current-quarter revenue in the range of $320 million to $330 million, above estimates of $296.09 million.
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The Partnership Between Amazon And Affirm Will Be Huge
AMZN and buy-now-pay-later provider Affirm announced a partnership in which the option to pay over time will be offered to Amazon customers for purchases of more than $50. Within minutes, Affirms shares were up over 40%.
Younger consumers have shown an aversion to traditional banking. Far fewer of them have credit cards and their use of debit cards is exploding. They are less likely than older to use banks at all and are the drivers of growth in online alternative-banking platforms. Despite their aversion to traditional forms of credit, younger consumers are the drivers of the buy-now-pay-later growth happening online and in stores. Its a paradox of banking that the existing lenders are finding frustrating to break through.
Affirm and its competitors have real data about their effect on retail sales. Shortly after their buy-now-pay-later service is initiated, retail sales take a jump. Although the incremental dollar amount added is often low, the annual effective interest rate is very lucrative. Lending to retail customers is a great and very profitable business. With the sales funnel provided by Amazon, Affirm will grow dramatically.
How Does Afterpay Work At Amazon
Afterpay doesnt work at Amazon the way it works at many other stores that offer it as a payment option.
You cannot simply log in to your Afterpay account to pay for your Amazon purchase.
Instead, you will need to use the virtual credit card option.
You will need to log into your account, choose the one-time-use credit card option and then enter that credit card information into the payment field during checkout at Amazon.
This will still allow you to split up your payments and makes it possible to use Afterpay the same way, but it does make the checkout process a little longer and more complicated.
It also saves the card in your payments on your Amazon account, even though the card will not work if you attempt to use it again.
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Why Doesnt Amazon Allow The Use Of Afterpay
Most stores like to offer Afterpay to their customers because it makes their store more appealing.
Customers like to have the option to buy things in payments that they may not be able to afford to pay for all at once.
With Afterpay, there is no need to apply for a credit card or worry about interest fees, but the customer does need to keep up with payments.
Amazon has no real reason to need to partner with Afterpay because it is already a top online store with a huge customer base.
Amazon may also worry about how problems with Afterpay could affect them, even though they are not theirs to sort out in the event of an issue.
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Why Is Amazon Making Me Pay With Affirm
Each time a customer selects Affirm as a payment method at checkout on Amazon.com, they will go through a quick real-time credit decision process for each new order, a spokesperson for Affirm told Insider. This is a soft credit check that does not impact a customers credit score and does not cost anything.
Amazon Is Adopting The Company’s Buy Now Pay Later Services
Affirm Holdings‘ stock hit an all-time high after it announced a partnership with Amazon on Aug. 27. Amazon is integrating Affirm’s “buy now, pay later” network into its marketplace the new payment option will enable its shoppers to split purchases of $50 or more into smaller monthly payments. Amazon has already tested out Affirm’s service with select customers and plans to broaden its reach over the next few months.
That’s good news for Affirm, which already serves big customers like Walmart and Peloton, and it’s another vote of confidence for the BNPL market, which has been growing in the shadow of traditional credit card companies. Let’s see why Amazon partnered with Affirm, how the deal could benefit both companies, and whether or not Affirm’s recent rally is worth chasing.
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Robinhood Stock Promo Causes Companies Proxy Costs To Soar And Theyre Not Happy About It
For all its faults, Robinhood is exemplary at the sometimes dark art of growth hacking . Its gamified pre-launch waitlist garnered an astounding 1 million signups.
But now its free share marketing promotions are getting attention from regulators and from the companies whose shares Robinhood is giving away.
Robinhood rewards new customers or those referring friends with a free share, typically one valued less than $10. Such signup bonuses or refer a friend programs are common in consumer fintech challenger banks like Chime and payment apps like Cash App offer cash incentives for signups and referrals.
But Robinhoods promotion comes with a hidden cost: delivering proxy materials. According to the WSJ:
Brokerages like Robinhood are required to deliver proxy materials to a public companys shareholders ahead of annual meetings. They are then reimbursed by the public company for the cost of distribution.
This means that Robinhoods stock giveaways have saddled some companies with larger bills for delivering proxy statements. Now, the practice is sparking a backlash from companies and scrutiny from market regulators.
One small company whose shares Robinhood gave away in its promotions, Catalyst, saw its bill for delivering proxy materials balloon 1,872%, from $12,500 in 2019 to $234,000 in 2020.
How To Buy Now Pay Later On Amazon Using Affirm
The Affirm Amazon partnership is great for people who are used to Affirm, but it may not look the way youre used to.
Affirm doesnt offer the pay in 4 installments option on Amazon. All purchases have different terms, but the interest rates range from 10% 30%, and terms go as long as 48 months versus 6 8 weeks like a typical Affirm purchase.
You may have to make a down payment at checkout, it depends on the size of your order and what you qualify for when you apply. Your payments start once the last item is shipped or 120 days, whichever occurs first.
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What Happens If You Never Pay Affirm
Affirm does not charge hidden fees of any kind, including late fees. If your payment is late, you will not be charged a fee however, your ability to shop will be turned off. In some cases, partial and late payments may hurt your credit score and reduce your odds of getting another loan with Affirm.
Is Sezzle Accepted At Target
Target is another well-known retailer that accepts Sezzle. Customers can make purchases both online and in-store using the Sezzle virtual card.
In-store and online customers will both be required to pay a 25 percent down payment at the time of checkout.
In the following weeks, the remaining balance will be paid in three two-week installments.
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Are There Any Restrictions On Afterpay
Afterpay can be used to make purchases anywhere it is accepted, but there are some restrictions.
You cannot continue to make purchases with Afterpay if you have an open balance or owe money on a previous purchase.
You will not be able to add items to your order or place a second order if you fall behind on your payments.
When it comes time to set up your account, you will be required to provide a credit or debit card.
This cannot be a prepaid card, and it must be in your name.
There are also restrictions that pertain to your spending limit.
You will be given a spending limit when you set up your account.
The only way to increase this spending limit is to pay off the amount you owe or the balance of your first purchase.
Each time you successfully pay off a purchase, your spending limit will increase.
If you fail to make your payment, you will receive a late fee that will also need to be made when you make your next payment.
Is Affirmation A Credit Product
When you apply with Affirm, they run a soft credit check to determine your risk as a borrower, and if you pass muster, they tell you what your interest rate will be. The company will then send you regular reminders of your monthly payments, which start one calendar month after your loan is approved.
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Abunda Vs Affirm: Which Is The Better Bnpl To Buy From Amazon
Posted on Last updated: January 13, 2022
Disclosure: This post may contain affiliate links, meaning we get a commission if you decide to make a purchase through our links, at no cost to you. Please read our disclosure for more info.
Amazon is the king of all platforms when it comes to buying things you need and maybe even things you dont. For smaller items, it can be a simple decision to click buy and have it at your doorstep in as little as a day. Other products, though, are more expensive and take some decision making to see if they fit in your budget.
Fortunately, Amazon buy now pay later options are plentiful.
The largest debate when shopping on Amazon is between Abunda vs. Affirm. Which is the better platform to buy the products you need?
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Alternatives To Affirm Financing
The best alternative to Affirm financing is the method Affirm was meant to substitute in the first place: . Making an online purchase with a credit card is ideal for a few reasons, including the ability to earn rewards on your online purchases. But importantly, credit card purchases made online are exceptionally safe and typically protected by card provider policies.
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Amazon Makes Buy Now Pay Later Deal With Affirm
Buy now, pay later has become a popular choice for younger consumers who either dont qualify for credit cards or who chose to not use that method of payment. More and more retailers have been partnering with BNPL companies in order to offer the service to shoppers.
Now, Amazon has entered that space by partnering with Affirm , a growing player in this very competitive area. The deal, which will roll out in the U.S. over the next few months, will allow Amazon customers to split purchases of $50 or more into smaller, monthly installments.
Its a move that should be popular among Amazon customers and it might even lure some new users to the platform. Affirm already works with Shopify and a number of top retail brands. BNPL has been growing in popularity which led to Square spending $29 billion to buy Afterpay, an Australian BNPL company, and even Apple releasing plans to partner with Goldman Sachs for its own BNPL offering.
BNPL does not use traditional credit checks. Instead, companies like Affirm, have their own proprietary methods for judging creditworthiness. They often start by approving consumers for relatively small purchases before increasing their limits. BNPL works a lot like old-fashioned layaway where the consumer makes payments over time. The big difference, however, is that BNPL users dont have to wait until they pay the item off before taking it home.
A full transcript follows the video.
Dan Kline 3:00: Thats probably your point of sale system.
Corp Card Startup Ramp Raises $300m Valued At $39 Billion
Corporate card and spend management startup Ramp has raised a $300m Series C, valuing the 2-year old startup at just shy of $4 billion. The startup raised a $115m round less than five months ago. The company also secured a $150m debt facility from Goldman Sachs this February.
Ramps card, expense management, bill pay, and accounting tools are focused on helping companies better manage costs and spend less than they would managing finances across multiple, disconnected platforms.
Ramp has seen rapid growth during the pandemic, with its number of cardholders increasing by 5x since the beginning of 2021, for a total of more than 2,000 businesses using the company as their primary spend management solution. Transaction volume has increased year-over-year by 1,000%, according to the company.
The company derives revenue primarily from interchange income not unlike consumer fintechs like Chime and Varo. Ramps 2,000 customers implies a valuation of $1,950,000 per customer.
Presumably investors have a bullish view of Ramps ability to increase spend from their current customer base, to attract newly formed companies, to displace incumbents like American Express, and to develop and cross-sell additional products, including lending.
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Why You Should Stay Away From Affirm
Lets talk about a few of the reasons why we dislike digital installment plans. To start, interest rates can be high. Like, really high. To give you some perspective, the average credit card interest rate is at 15.91% right now, while Affirms rates can get up to 30%!1,2 Thats almost twice as much!
And dont forget, the longer you take to pay off that loan, the more the interest you pay. And speaking of interest, if you return an item, you wont be refunded the interest you paid Affirm.
Lets talk about what happens if you miss a payment. Well, as we said, Affirm wont charge you late fees. But customer reviews on Better Business Bureau say the late payment still damages your credit scorewhich can be a worse slap in the face than a fee. And though were anti-credit score, were also anti being sneaky about how your processes work. Also, customers say getting a refund from Affirm after they return an item is often a nightmare.
Bottom line: Affirm is in the debt business. And debt preys on your desire for the good life. Right now. And listen, were all about the good lifebut you should get there the right way . And guess what? This right way is worth it. Cut out this middleman and pay for the good life with actual money!
This have it now, pay for it slowly and painfully mindset has got to end.
In 2022 Will Amazon Be Accepting Sezzle
In 2022, Amazon will no longer accept Sezzle virtual cards as a form of payment. Many other online and brick-and-mortar retailers, such as Target, can make use of Sezzle. Additionally, Amazon has teamed up with Affirm to accept virtual card payments of $50 or more. Amazon now accepts Klarna payments, and points earned on purchases can be redeemed for Amazon gift cards.
Continue reading for more information on how customers can make purchases using virtual payment options like Sezzle, Klarna, and others!
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What Are The Pros And Cons Of Afterpay
As with any service, Afterpay has its pros and cons.
As long as you use it responsibly and correctly, it can be very helpful.
If you fail to make your payments or get in over your head with it, it could cause some financial problems for you.
Here are the pros and cons of Afterpay
1. Store Integration
One of the best things about Afterpay is that many stores have this service integrated into their websites.
That means all you have to do is choose the Afterpay payment option when you are at the checkout and log into your account.
This is fast and easy and makes it possible to shop at many different stores without having to worry about getting out your debit or credit card.
Its easy for anyone to use Afterpay at their favorite stores that accept it.
2. Quick Approval
There is no need to worry about a credit check when you use Afterpay.
Even though your information will be considered, you do not have to provide a social security number or any other information that could result in a hard pull on your credit report.
The process is very fast and simple, and you can sign up and be shopping within minutes.
Everyone is given an initial spending limit, and you can increase that spending limit by paying off each purchase on time.
4. No Interest Fees
As long as you use Afterpay responsibly and are able to make your payments on time, there are no interest fees to worry about.
The only fees come if you miss a payment or make the payment late.
5. Payment Plans
6. Less Debt