US-based fintech company Affirm Holdings (AFRM, Financial) has announced its expansion into the UK by launching its buy now, pay later (BNPL) services, marking its first overseas venture. Founded in 2012, Affirm is known for offering flexible installment payment options with no late fees. The company underwrites each transaction before making a loan decision. With authorization from the UK's Financial Conduct Authority (FCA), Affirm now offers non-interest and interest-bearing monthly payment plans in the UK, with interest calculated based on the original principal.
Affirm boasts a global user base of over 50 million and more than 300,000 active merchants, including major brands like Amazon (AMZN), Shopify (SHOP), and Walmart (WMT). In the UK, early adopters of Affirm's payment method include Alternative Airlines and Fexco, with more brands expected to join in the coming months. CEO Max Levchin stated that the company has prepared for over a year to enter the UK market, seeing substantial demand from local merchants. He noted that the English-speaking market was particularly well-suited for Affirm's expansion, although future growth into non-English markets will require additional effort.
In launching its BNPL services in the UK, Levchin acknowledged the intense competition within the British fintech sector. Affirm aims to stand out with unique financing products, including a payment plan extending up to 36 months, which has attracted significant market attention. This strategy was key in securing the company's entry into the UK market. In the UK, Affirm will compete against established players like Klarna, Block's (SQ) Clearpay, Zilch, and PayPal (PYPL), which have already entered the BNPL sector since 2020. Levchin emphasized Affirm's range of financing options, particularly their long-term installment plans, as a distinctive feature offering customers greater flexibility.
As Affirm enters the UK market, the British government is consulting on regulatory plans for the BNPL industry. Key considerations include demanding clear information from BNPL providers to ensure consumers pay within their means, and granting rights if issues arise. Levchin welcomed these discussions, highlighting Affirm's backend efforts in automation and software development to prevent shifting responsibility onto consumers. He mentioned that passing on responsibility to consumers is risky, which Affirm avoids.
With months of talks with regulators, Affirm has gained authorization from the FCA in the UK. Levchin noted that the company's "good reputation" was instrumental in obtaining this authorization. He emphasized that Affirm has never charged late fees, deferred interest, or engaged in anti-consumer practices that might be hard to accept. This reputation for consumer protection is one reason merchants favor Affirm. As it enters the UK market, Affirm plans to continue expanding its global influence.
