Amazon is entering the "buy now, pay later" space.
Affirm is the partner of the e-commerce giant for its first installment payment option on the popular site.
Amazon customers in the U.S. will have the option to buy now and pay later through Affirm starting Friday, with an expanded rollout over the next months, the companies stated in a statement. Amazon customers will be able to split $50+ purchases into smaller monthly payments.
After-hours, Affirm's stock jumped as high as 47% on Friday, according to the news. This added more than $8 billion in market capitalization to Affirm, while Amazon shares remained unchanged.
Friday's partnership is another sign of the booming lending market as more consumers turn to these other lines of credit. Square entered the market earlier in August with a $29B deal to acquire Australian fintech Afterpay.
Instalment loans, also known as installment loans, have been around for decades and were traditionally used to purchase furniture or other large-ticket items. Fintechs and online payment providers have been trying to create their own "pay later" products that can be used for online purchases starting at the low hundreds of dollar.
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Affirm is one the most well-known installment payment options. It is compatible with over 12,000 merchants including Walmart and Peloton.
PayPal, Klarna and Mastercard, Fiserv, American Express and Citi, as well as J.P. Morgan Chase, offer similar loan products. Bloomberg reported that Apple plans to launch installment loans in partnership with Goldman Sachs.
Affirm stated that some Amazon customer loans will bear interest but others will have 0% APR.
Eric Morse (Senior Vice President of Sales at Affirm), stated in a statement that "By partnering Amazon, we're bringing transparency, predictability, and affordability that Affirm today to the millions who shop on Amazon.com.com in the U.S." Affirm's alternative credit cards is also available. This gives Amazon customers more choice and flexibility.
