Affirm expands Buy Now, Pay Later service to UK

London — Buy ​​now, pay later company affirm on Monday launched installment loans in the UK, its first overseas expansion.

Founded in 2012, Affirm is an American fintech company that offers flexible time-based payment options. The company says it underwrites all individual transactions before making a loan decision and does not charge late fees.

Affirm, which is authorized by the Financial Conduct Authority, said its services in the UK include interest-free and interest-bearing monthly payment options. Interest on that plan is fixed and calculated based on the original principal amount. That is, it does not increase or compound interest.

The company’s expansion into the UK marks its first foray into a market outside the US and Canada. Affirm counts more than 50 million users and more than 300,000 active merchants worldwide. Amazon, Shopify and walmart.

The first merchants to offer Affirm as a payment method in the UK include flight booking website Alternative Airlines and payment processor Fexco. Affirm said it plans to adopt more brands in the coming months.

Affirm CEO Max Levchin told CNBC that the company has been working on launching in the UK for more than a year. Levchin said Affirm chose the UK as its first overseas expansion target because of the high demand from domestic merchants.

In an interview last week ahead of Affirm’s UK launch, Levchin said it was a great fit for business because “this is a huge market and English is spoken”. Affirm plans to eventually expand to other markets outside of the English-speaking world, but that will require more effort, he added.

“There are a lot of competitors here who are doing a smart job of servicing the market. But when we started reaching out to sellers, just to look locally, the market was saturated. Does everyone feel well-served?” Levchin said. “We got a really big gravitational pull from the market. That kind of sealed the deal for us.”

Competition in the UK financial technology sector is fierce. In Affirm’s focus on buy now, pay later, the company will have plenty of competition from big players like Klarna. Mr. Block clear pay, zilch, paypalentered the BNPL market in 2020.

What sets Affirm apart from some of these companies, Levchin said, is that its wide range of financial products gives customers the ability to repay their purchases over a much longer period of time. For example, Affirm offers a payment program that lasts 36 months.

Affirm’s launch in the UK comes as the government consults on plans to regulate the buy now, pay later industry.

Among the key measures being considered by the government is to require BNPL providers to provide clear information to consumers, ensure that people don’t pay more than they can afford and give customers rights if problems arise. There are plans to make it mandatory to provide

“Generally speaking, we welcome thoughtful regulation that pushes work to market to do the right thing, but also know how to avoid making it too onerous for the end customer,” Levchin said. said.

“It’s great to tell people to do a lot of work in the background before lending you money. We’re good at automation. We’re good at writing software. We do the work,” he says. added. “Putting the burden on to consumers is dangerous.”

Levchin said Affirm secured approval from the country’s financial services watchdog, the Financial Conduct Authority, after months of discussions with the agency. He added that the company’s “pure reputation” helped.

“We’ve never charged a dime in late fees, we’ve never deferred interest, we’ve never done any of the anti-consumer things that people are struggling with,” Levchin told CNBC. ” he said. “So we have a clean reputation of being very thoughtful and pro-consumer, and our sellers love that.”