Amazon will soon allow customers to delay full payment for items over $50.
After Affirm announced its partnership with Amazon, Affirm shares rose more than 40%
E-Commerce companies are looking to consolidate their position in the "buy Now, Pay Later" space.
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Amazon has announced its partnership with Affirm, a platform that allows customers to "buy now and pay later", on Friday.
Amazon's "pay over time" option, which allows customers to spread the cost of purchases above $50 into smaller monthly payments that are spread over a longer time period, will now be available at checkout.
Affirm stated that the total cost of the purchase would be displayed at all times and that customers won't have to pay more than the agreed amount.
Affirm stated that Amazon customer loans may bear interest but others will be 0% APR with no hidden or late fees.
Eric Morse, Senior Vice President of Sales at Affirm, stated in a statement that "By partnering Amazon we're providing the transparency predictability and affordability Affirm provides today for the millions of people who shop Amazon.com in America."
Younger generations are increasingly interested in the buy-now-pay later model. They prefer flexible payment options and are more likely to use this credit option than having to pay full price upfront. This market is exploding as e-commerce firms look to make deals and capitalize on pay-later businesses like Klarna, Affirm, and Afterpay. Similar installment plans have been introduced by Apple Pay and PayPal to their payment methods.
Affirm shares rose more than 40% after the announcement of its partnership. This partnership added more than $80million to the company's market capital. Affirm expects the Amazon partnership to be a significant advantage, particularly considering that COVID-19-driven ecommerce consumer habits led Amazon to surpass Walmart in most sales.
Amazon is working to make the payment option available to everyone, although it is currently only available to select customers.
