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Thursday, December 2, 2021

Amazon cooperates with Affirm on buy-now-pay-later payment option

The buy-now-pay-later market is a booming business. More and more people are taking advantage of the option of paying for a product in installments. Online retail giant Amazon also wants to take advantage of this trend and has teamed up with the Affirm payment app for this purpose.

• BNPL market is growing in popularity
• Affirm brings more “transparency, predictability and affordability” to Amazon
• Stocks respond positively to deal

Buy a product now, but only pay off later in installments – this is a trend that is increasing, especially among younger people. This new flexibility in shopping is made possible by a wide variety of so-called buy-now-pay-later platforms (BNPL) that specialize in precisely this service. They are often an inexpensive alternative to the conventional credit card , since in most cases there is no interest for the customer, only the purchase price is actually paid. There are now numerous providers who vie for every customer in the highly competitive market, such as Klarna , Afterpay or Affirm.

Partnership between Affirm and Amazon

The Fintech Affirm recently achieved a coup – a partnership with online giant Amazon . As the two companies recently reported, the payment option with Affirm would from now on be available during a test phase for selected customers in the USA for purchases from a value of 50 US dollars. There would be no hidden costs for the customers and no interest would accrue, just as it corresponds to the Affirms business model.
“By partnering with Amazon, we are bringing the transparency, predictability and affordability that Affirm offers to the millions of people who shop on Amazon.com in the US today. Affirm’s alternative to credit cards provides more choice and flexibility in what consumers use on Amazon want, “said Affirms Eric Morse, senior vice president of sales, in the press release.

This is how Affirm and Amazon stocks reacted

The news was very well received by investors: Affirm shares jumped a whopping 46.67 percent to 99.59 US dollars on the reporting day. For the Amazon paper, it went up 2.15 percent to 3,421.57 US dollars.

Buy-now-pay-later options are growing in popularity

The study “Rethinking Consumer Financing”, published in August by the financial services provider Credi2, also shows that BNPL options are becoming increasingly popular. A representative survey of 1,000 people from Germany and Austria on the subject of buy-now-pay-later models was carried out. According to Credi2, the results clearly show that an option to pay in installments is becoming increasingly important for customers, especially in the 18- to 34-year-old age group. Shop donations are increasingly relying on payment apps such as Klarna and PayPal & Co., which could turn out to be a problem for banks: “Hardly anyone is willing to laboriously submit their loan application to the house bank and then wait for the money to be paid out. For the customer, it becomes a matter of course that the lending process goes smoothly is integrated into the purchasing process, “said Credi2 CEO Daniel Strieder, commenting on the study.

Tech giants are jumping on the bandwagon

Amazon isn’t the only tech giant to team up with a BNPL service provider. Square recently announced that it would take over affirm rival Afterpay for $ 29 billion. According to Bloomberg News, the iCompany Apple is planning to install a similar payment option together with the major US bank Goldman Sachs .

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