Affirm, the credit-card alternative start-up firm has announced its partnership with e-commerce giant Shopify for market growth in a new way by empowering consumers to split up purchases without interest or fees.
“Shop Pay Installments” — is the name of the new option that Canada-based Shopify is rolling out later this year. It will empower customers who are approved by Shop Pay to split their purchases into four equal, bi-weekly installments, which will be processed and handled by Affirm.
Affirm, was ranked no 23 on the 2020 CNBC Disruptor 50 list, stated that the new payment option and partnership reflects how small businesses must reinvent themselves with e-commerce strategies and meet young shoppers where they prefer to buy.
Shopify is one of the fastest-growing commerce platforms for businesses that want to sell direct-to-consumers and has witnessed an enormous increase in its share price this year.
Affirm founder and CEO Max Levchin in a press release “We can help merchants seamlessly enable a pay-over-time option at checkout. In doing so, we’re helping them reach new customers, particularly Gen Z and Millennials, who are looking for more transparent and flexible ways to pay”.
Affirm’s fast-growing customer-base of existing “buy-now-pay-later” alternative to credit cards is available at over 6,000 merchants in the U.S. and is used by 5.6 million people, according to the company. As a result of the ongoing coronavirus pandemic, there’s been a massive surge in the digital platform over the past few months.
“I do think the shift from offline to online spend is very powerful. I think it’s here to stay,” Levchin said, while also noting that the demographic of Affirm users has shifted with adoption which included older customers like his 72-year-old mother. “I do think that will eventually slow down a bit … but I don’t think the trend is going to reverse”.
Levchin further went on to comment that the biggest winners in the buying habits shift will be the digital platforms — not necessarily merchants themselves. “When you look at retailers writ large … platforms, providers that enable merchants to serve customers where they are, which is online, are going to be huge winners,” he said.
“On the consumer side … I do believe the age of credit cards is rapidly coming to— I wouldn’t call it an end, but a viable alternative in the buy-now-pay-later tools that are built around transparency, clarity, and simplicity.”
Affirm, which is a two-time CNBC Disruptor 50 company, and Shopify will begin testing in the coming months, with the hope of making “Shop Pay Installments” available to eligible U.S. merchants later this year.
Terms for consumer approval to access the new “Shop Pay” option were not disclosed yet.