The buy now, pay later service Affirm has just landed a new partnership with popular payments company Stripe.
The deal opens up a large avenue for many more companies to use the service, given Stripe's ubiquity, and this in turn gives even the smallest companies a way to integrate buy now, pay later functionality with their in-store POS systems.
It's also the latest in a spree of deals for Affirm. Just this month, the payment network deepened a partnership with WooCommerce (and the ecommerce service's 3.7 million merchants) as well as adding a multi-year extension to its Shopify partnership.
How the Service Works
Starting today, customers using the Stripe payments system to buy their items at a retailer will have Affirm's “Adaptive Checkout” feature available to them.
For purchases between $50 and $30,000, any eligible customer will be able to split their costs over multiple payment installments on either biweekly or monthly schedules. The maximum credit limit for the function is $17,500.
The upside for business using Stripe is clear, according to a statement from Geoff Kott, Chief Revenue Officer at Affirm, in the release announcing the partnership:
“Businesses who offer Affirm at checkout have reported as much as 85% higher average order values compared to other payment methods, and our new partnership delivers a powerful growth engine to the millions of businesses and platforms that use Stripe,” says Kott, who adds that the deal “provides immense value for businesses looking to reach new customers, increase sales, and drive growth.”
In addition, Sophie Sakellariadis, Payments Product Lead at Stripe, cited the need to keep up with changing consumer preferences in her statement discussing the deal.
The Rise and Fall of BNPL
As Sakellariadis indicates, buy now, pay later services — or BNPL for short — have seen a rapid rise in the last few years. In early 2022, 55.8% of US consumers reported having used this type of payment service, a percentage up from 37.65% in the summer of 2020.
Not all BNPL services are sailing to success, however. One of them, Klarna, laid off 10% of its workforce last week, despite raising $639 million at a $45.6 billion valuation in 2021.
Some BNPL services are likely to falter amid a downturn in the tech industry that's making many venture capital investors second-guess pouring money into any startup lacking an iron-clad plan to reach profitability. Affirm's stock is down as well, but its recent partnerships bode well for the future.
Affirm's Star Remains on the Rise
Affirm charges interest fees in some cases, but says it will not charge hidden or late fees — both of which are big potential downsides to BNPL services, thanks in part to a lack of regulatory oversight to steer customers away from racking up unnoticed late fees.
BNPL remains a service worth considering for any small businesses with a physical retail presence, ecommerce website, or both. And thanks to Affirm's no-late-fee policy, it won't put quite as heavy a financial burden on the consumers, making it stand out as one of the better BNPL services to consider.
Its partnerships with Stripe, WooCommerce and Shopify don't hurt, either. After all, we've ranked Shopify highly as a way any small business can get started with a simple and easy but feature-rich ecommerce website that starts at $29 per month — you can check out our full guide to the popular website builder to learn more.