Amazon selects Affirm to offer split payments

Amazon US is taking its turn in the deferred payment battle by signing a partnership with credit specialist FinTech and BNPL Affirm. Their cooperation reshuffles the cards in a burgeoning market.

FACTS

• Amazon's U.S. customers will soon be able to access new split or deferred payment services to pay for their purchases on Amazon's e-commerce platform.

• This payment option will only be available for purchases over $50.

• Many items will be eligible such as furniture, home decor, electronics or clothing. Affirm's BNPL option will not apply to Amazon Fresh products, however.

• For now, the partnership of the two players is developing in a pilot phase. The deferred payment service is only available to selected Amazon customers. It should be extended to all Americans within a few months.

CHALLENGES

• Revaluing its offer: Affirm is currently the 4th largest player in fractional payments in the United States. Its stock took off on Wall Street after the announcement of its partnership with Amazon.

• Improve your shopping experience: Although Amazon is the leader in this field, BNPL is known to improve conversion rates, reduce abandonment and speed up checkout. Affirm's partnership with Shopify is a testament to this (Affirm's BNPL solution reportedly results in up to 50% higher conversion rates, up to 28% fewer cart abandonments and 27% faster checkout times). This is not the first time the web giant has launched a BNPL initiative on a global scale. Amazon already offered a deferred payment service with Zip in other markets such as Australia.

• Rejuvenate its customer base: BNPL is also popular with younger shoppers, so Amazon might be attracted by the fact that 50% of Affirm's customers are either millennials or Generation Z.

MARKET PERSPECTIVE

• The trend is getting stronger once again. To combat the devouring appetite of some e-commerce payment specialists, the web giants are having to diversify in turn by introducing their own payment service.

• While the two leading BNPL players in the US Klarna and Afterpay are beginning their shift to e-commerce, it is undoubtedly the BNPL specialist FinTech Affirm that is making the best move by partnering with the e-commerce giant and could see the FinTech take the top spot among BNPL providers.