has signed a deal that will allow merchants to offer fintech startup Affirm’s installment payment service starting later this year, the two companies announced Wednesday.
Affirm allows customers to pay for purchases over time without using a credit card. The companies said merchants on the Shopify (ticker: SHOP) e-commerce software platform that choose to offer the service can provide consumers a “buy now, pay later” option, in which buyers can split purchases into four equal biweekly interest-free payments. Customers won’t be charged late fees or other service fees. Merchants will receive the full purchase amount less upfront fees, and Affirm will handle payment collection.
Affirm CEO Max Levchin said in a statement that the new service should help Shopify merchants reach new customers, “particularly Gen Z and Millennials, who are looking for more transparent and flexible ways to pay.”
In an interview with Barron’s, Levchin said that merchants who offer Affirm’s installment payment service as an option often see volumes rise 80% to 100%. He notes that for many merchants, the fees involved are no higher than those they would pay for credit-card processing, and in some cases are less. Specific economics of the arrangement with Shopify are still being worked out, he says, but the program should be in effect before the holiday shopping season.
Levchin says that the accelerated adoption of online commerce that has been triggered by the Covid-19 pandemic is likely to stick. He notes that as a result of the pandemic, people like his 72-year-old-mother who actually like going to the market and shopping in physical sores have instead been shopping on sites like
com (AMZN), and Instacart. “A giant group of people have been forced into the modern world,” he says.
Shopify shares were down 0.3%, at $949.87, in recent trading. The
was up 0.2%.
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