Buy now, pay later company Affirm has launched its installment loans in the U.K., marking its first international expansion.
Founded in 2012, Affirm is an American fintech firm that provides flexible pay-over-time options. The company states that it assesses each transaction before making a lending decision and does not impose late fees.
Authorized by the Financial Conduct Authority, Affirm’s U.K. offerings will include both interest-free and interest-bearing monthly payment plans. Interest rates will be fixed and calculated on the original principal amount, avoiding any increases or compounding.This expansion into the U.K. represents Affirm’s first entry into a market outside the U.S. and Canada. The company has over 50 million users globally and more than 300,000 active merchants, including major brands like Amazon, Shopify, and Walmart.
Among the first U.K. merchants accepting Affirm are Alternative Airlines and payment processing company Fexco. Affirm anticipates onboarding more brands in the coming months.Max Levchin, CEO of Affirm, shared with CNBC that the company had been preparing for this U.K. launch for over a year. Levchin noted that the decision to target Britain stemmed from strong demand from local merchants.
“It is a huge market, it’s English-speaking,” making it a fitting choice for the business, he explained in an interview prior to the launch. Although the firm plans to expand into non-English-speaking markets in the future, it will require more effort, he added.
Levchin acknowledged the competitive landscape in the U.K. fintech sector, particularly in the buy now, pay later (BNPL) space, where Affirm will face significant competition from established players like Klarna, Block’s Clearpay, Zilch, and PayPal, which entered the market in 2020.
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What sets Affirm apart?
According to Levchin, is its longer-term financing options, allowing customers to pay off purchases over extended periods, with some plans lasting up to 36 months.
Affirm’s U.K. launch coincides with the government’s consultations on regulating the BNPL industry. Key measures under consideration include requiring BNPL providers to deliver clear information to consumers, ensuring affordability, and establishing customer rights for dispute resolution.“Generally, we welcome thoughtful regulation that encourages the market to act responsibly while avoiding excessive burdens on consumers,” Levchin stated.
He emphasized that the firm is well-equipped to handle regulatory requirements, citing the company’s efficient automation and software capabilities. “Shifting the burden onto consumers can be risky,” he warned.
After months of discussions, Affirm secured authorization from the Financial Conduct Authority, which Levchin credited to the company’s strong reputation. “We’ve never charged late fees, we avoid deferred interest, and we steer clear of anti-consumer practices. Our reputation for being consumer-friendly resonates with merchants,” he concluded.
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