The UK’s buy now, pay later (BNPL) market is heating up with the addition of a major new competitor, Affirm, an established player in the North American sector.
Affirm announced the launch of its monthly BNPL product and registration with the Financial Conduct Authority (FCA) in the UK today (4 November). Its debut partners in the country are booking site Alternative Airlines and global fintech and payments processor Fexco.
The company’s service has been added as a payment option on both sites’ checkouts. The deal with Fexco could enable further expansion, however, as the fintech platform’s customers will have the option to integrate the BNPL method as well.
Nasdaq-listed Affirm hopes to build on its success in the US and Canada, where BNPL products have been surging in use in tandem with the UK and Europe. Its North American activity has seen partnerships with the likes of Amazon, Shopify and Walmart, shoring up a network of 50 million consumers and 300,000 active merchants.
“Affirm was founded on the premise of putting people first and empowering consumers to take greater control over their finances,” said Max Levchin, Founder and CEO of Affirm.
“Building on our leadership in the US and Canada, where we partner with top retailers and commerce platforms, we see a significant opportunity to extend our mission of building honest financial products to the UK.
“We know that UK consumers are savvy shoppers who appreciate upfront, no-nonsense products. We look forward to offering them responsible credit options that truly put consumers first and working collaboratively with our UK partners to demonstrate how honest finance is good business.”
Can Affirm stand out from the crowd?
BNPL has increased in popularity across Europe, and the UK has been no exception to this. According to a survey by comparison site Finder, BNPL has been used by 50% of the UK public at some point, equating to around 26.4 million people.
A notable company to benefit from this is Klarna, a Swedish fintech company which has established itself as Europe’s leading BNPL provider. The company has recorded successive quarters of growth and, like San Francisco’s Affirm, is eyeing up transatlantic opportunities – looking at the US whilst Affirm looks to Europe.
Affirm will find itself going up against stiff competition in the UK in the form of Klarna and other established BNPL providers like Zilch, Clearpay and Afterpay. However, the firm’s interest-free and interest-bearing monthly payment options may prove popular with UK consumers.
Setting up shop in London, Affirm’s UK team currently consists of ‘more than 30’ employees headed by its UK VP and Country Manager, Ruth Spratt. The firm plans to hire additional UK staff to join its global employee-base of 2,000 people.
Spratt remarked: “There are many brilliant businesses in the UK that make this country what it is – and we can’t wait to start working with them. The UK’s open economy, mature consumer market, and world-class talent makes it the perfect place for the next phase of Affirm’s journey.
“By entering the UK alongside a leading travel provider and platform partner, we’re able to expediently and deliberately begin growing Affirm’s UK network of consumers and merchants. We look forward to continuing to expand in the coming months.”
New region, new regulations
The growth of BNPL in the UK has not just been noticed by commercial stakeholders, however. Regulators and policymakers from both sides of the political spectrum have also taken note.
Last month, HM Treasury announced long-awaited rules and regulation around BNPL, also initiating a consultation with the industry. The main measure is that the FCA will apply affordability rules to the BNPL space.
However, it is important to note that the measures do not go as far as Affirm’s founding country of the US, where credit card rules have been applied to BNPL. This was criticised by Klarna, which in contrast has called for regulation of UK BNPL in the past.
Additionally, the addition of a newcomer to British BNPL has been welcomed by the Labour government. The party has been working to develop closer links with businesses since before its July election victory, and is trying to attract more overseas businesses to set up shop and invest in the country.
Poppy Gustafsson, Minister for Investment, commented: “We are proud to have Affirm establish a presence and open for business in the UK. Their substantial investment will not only help create tech-savvy jobs but underscores their confidence in the UK economy.
“This government is laser-focused on supporting business growth and expansion. The UK market offers a range of exciting opportunities, helping companies diversify their offerings and revenue streams, and making the UK one of the most innovative economies in the world.”
