A new partnership between Shopify and payments solution Affirm will provide U.S. Shopify merchants with “buy now, pay later” functionality. Affirm will exclusively power the Shop Pay Installments feature, to be released in coming months, which lets Shop Pay customers pay for items in four interest-free, biweekly payments.
Installment payment plans have become increasingly popular in the U.S. market, particularly with younger shoppers who commonly avoid credit cards or other traditional layaway methods. A number of solution providers offer installment services, but this partnership appoints Affirm as the sole provider of “buy now, pay later” plans for Shopify merchants.
Through Shop Pay Installments, approved customers will have the opportunity to pay a quarter of the retail price at checkout. They will then be charged 25% of the price, every two weeks, until the total has been paid. However, the merchants will receive the full sum of the purchase upfront, with Affirm assuming the risk for payment collection. Affirm also differs from some of its competitors in that it does not charge any fees for late payments.
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“It’s critical for businesses to make it easy for their customers to buy from them,” said Kaz Nejatian, VP and GM of the Financial Solutions Team at Shopify. “Shop Pay Installments helps our merchants offer their customers more payment choice and flexibility, while delivering a seamless checkout experience to boost conversion and overall sales.”
Several reports from the last few months have shown an increase in both e-commerce sales and in the use of installment payments to fund them. As shoppers engage more with online purchasing, they are also looking to be more responsible with their spending as the pandemic continues to impact the economy. The merchants who are able to provide payment flexibility are likely to reap rewards, says Affirm.
“With the acceleration of online spending, many small businesses must reinvent themselves,” said Max Levchin, founder and CEO of Affirm. “This includes embracing the rising importance of e-commerce strategies and meeting consumers, particularly young shoppers, where they are. We’re helping [merchants] reach new customers, particularly Gen Z and millennials, who are looking for more transparent and flexible ways to pay.”