Affirm settles in the UK

Affirm, an American FinTech specializing in fractional payments, has just announced its arrival on the UK market. It has taken a year of preparation to realize its ambition to enter this new, fast-growing market, which is also undergoing major regulatory changes.

FACTS

• Affirm is a benchmark in the BNPL market on the other side of the Atlantic. But today, its positioning on its own continent no longer seems to satisfy it alone. Affirm has just announced the launch of its installment plans in the UK.
• Affirm intends to begin offering its monthly payment options in the UK. The service will be available primarily on Alternative Airlines, a flight booking site, as well as Flexco, a global leader in the FinTech market and payment processing.
• Affirm specifies that its service will subsequently be rolled out more widely.
• The roll-out of its services in the UK will take place under the supervision of the Financial Conduct Authority, the UK's financial sector regulator.

CHALLENGES

• Taking advantage of a vast market: Affirm justifies its new ambitions in the UK by highlighting the fact that almost a quarter of British consumers use BNPL services to pay for their purchases. This figure comes from a study presented in January 2024 and carried out by the Centre for Financial Capability, a charity specializing in financial education in the UK. The figure rises to 34% among 18-34 year-olds.
• Setting up against the competition : While Affirm holds the leading position in the US, in the UK, the FinTech will have to elbow its way past established players such as Klarna, Monzo and American Express.
• Expanding : Affirm's positioning in the UK should, according to the FinTech, enable it to consolidate its international positions, whereas until now it has operated its services in the USA and Canada. It currently has 50 million users and over 300,000 active merchants (including Amazon, Shopify and Walmart, for example) for its services.

MARKET PERSPECTIVE

• The launch of Affirm in the UK comes at a time when the country has just stepped up its efforts to regulate fractional payments. The British government, like Europe, has been working on this issue for several months. And the UK's Financial Conduct Authority (FCA) has recently stepped up its work.
• In the United States, it was the CFPB (Consumer Financial Protection Bureau) that announced last May that BNPL would be regulated, as it was considered too similar to credit cards.