Buy now, pay later (BNPL) giant Say launches in the United Kingdom, its first market outside of North America.
Its long-awaited arrival comes as UK lawmakers mull new rules to align BNPL companies with other traditional consumer credit services, although such laws are not expected to come into force until at least 2026 – long enough for Affirm to build traction and win favor with both consumers and regulators.
Founded in 2012, Affirm emerged from a startup incubator called HVF, created by the co-founder of PayPal. Max Levchin (pictured above), who eventually took the reins at Affirm in 2014 to fuel its business momentum. The company expanded beyond the US and Canada. in 2022and has established lucrative partnerships with major e-commerce companies over the years: Affirm has been Shopify’s primary financial partner for nearly a decade, not to mention Walmart and Amazon, which chose Affirm as Amazon’s first BNPL partner Pay in the US last year. . More recently, Affirm also landed the mighty Apple as a client.
‘Normalizing debt’
The BNPL model is simple: customers are invited to purchase goods on credit, paying off the debt in several interest-free installments, and the BNPL provider monetizes through merchant fees. Or, where the customer requires a longer repayment period, the loan may also include interest.
The BNPL market has long been on the UK regulatory radar, with traditional operators such as Klarna and clear payment Often criticized for encouraging impulsive buying and normalizing debt. The UK Financial Conduct Authority (FCA) has so far had some power to keep BNPL providers in checkbut there are key exemptions, such as services involving interest-free credit, where lump sum agreements stipulate that debts must be repaid within 12 months.
But new rules in the works could bring BNPL companies completely in line with other consumer credit companies. The Labor government last month announced a new BNPL consultation, with plans to introduce regulations to “ensure that people using BNPL products receive clear information, avoid unaffordable loans and have strong rights when problems arise”.
It’s clear that Affirm is already pushing to position itself favorably with both sponsors and the powers that be. In fact, the company notes for the UK launch that its interest-bearing payment options will not involve compound interest; Instead, interest will be fixed and calculated entirely on the original amount borrowed.
It is also worth noting that Klarna started charging late payment fees in the UK last year, and this is one area where Affirm aims to differentiate itself: It says it won’t charge late fees or any other “hidden fees.”
Face to face
It has been a difficult few years for the BNPL sector. Klarna was valued at more than $45 billion in 2021, a figure that quickly plummeted by 85% to $6.5 billion following the major post-pandemic “correction” that many companies endured; has increased again to 14.6 billion dollars. It’s been a similarly turbulent time for Affirm, whose ups and downs have followed a trajectory reminiscent of its European rival.
Following its 2021 IPO, Affirm saw its market capitalization reach a dizzying height of $47 billion, but its stock took a big hit, with its market capitalization falling below $3 billion on last year. However, Affirm stock has risen to more than $13 billion by 2024, and the NASDAQ-listed stock company recently reporting a 48% year-over-year increase in fourth-quarter revenue and a drop in losses from $206 million to $45 million. Levchin also predicted profitability in 2025.
We’ve known for some time that the UK would likely be Affirm’s next port of call outside the US and Canada, and the company’s chief revenue officer Wayne Pommen is going to record say that it would target markets where some of its most important partners already have a presence.
For its UK launch, there aren’t any of the same big-name brands it has domestically, but the fact that it counts Amazon, Shopify and Apple as customers in the US means it wouldn’t be a big deal. For now, however, Affirm will market companies such as flight booking site Alternative Airlines and payments processor Fexco, and “other British and international brands are expected to follow.”
In the lead-up to today’s launch, Affirm told britcommerce that it has already hired around 30 employees, including Ruth Spratt who is leading the local charge, while also looking to increase his staff for the rest of the year. And similar to your remote-first spirit elsewhereWorkers are not tied to a particular physical center.
The company did not confirm its upcoming growth plans in Europe or elsewhere, although it said it would “take the same disciplined approach” it has always applied to any future expansion.