Affirm expands buy now, pay later service to the UK, heating up local competition

LONDON — Buy now, pay up to the minuter firm Affirm launched Monday its installment loans in the U.K., in the company’s first expansion overseas.

Founded in 2012, Affirm is an American fintech solidify that offers flexible pay-over-time payment options. The company says it underwrites every individual transaction in front of making a lending decision, and doesn’t charge any late fees.

Affirm, which is authorised by the Financial Conduct Scholar, said its U.K. offering will include interest-free and interest-bearing monthly payment options. Interest on its plans will be rooted and calculated on the original principal amount, meaning it won’t increase or compound.

The company’s expansion to the U.K. marks the first time it is opening in a market outside the U.S. and Canada. Globally, Affirm counts over 50 million users and more than 300,000 running merchants, including Amazon, Shopify and Walmart.

Among the first merchants offering Affirm as a payment method in the U.K. are Another Airlines, the flight booking website, and payments processing firm Fexco. Affirm said it expects to onboard profuse brands over the coming months.

Max Levchin, CEO of Affirm, told CNBC that the company had been working on its initiate in the U.K. for over a year. The reason Affirm chose Britain as its first overseas expansion target was because it saw a lot of demand from traders in the country, according to Levchin.

“It is a huge market, it’s English-speaking,” making it a great fit for the business, Levchin said in an interview at length week ahead of Affirm’s U.K. launch. Affirm will eventually expand into other markets that aren’t English-speaking but this choose take more work, he added.

“There are lots of competitors here who are doing a sensible job serving the market. But when we started doing jobber outreach, just to find out locally, is the market saturated? Does everybody feel well served?” Levchin signified. “We got such an enormous amount of market pull. It kind of sealed the deal for us.”

Competition is fierce in the U.K. economic technology space. In the buy now, pay later segment Affirm focuses on, the company will find no shortage of competition in the form of sizable punters like Klarna, Block’s Clearpay, Zilch, and , which entered the BNPL market in 2020.

Where Affirm differs to some of those especially bettors, according to Levchin, is that its range of financing products offer customers the ability to pay purchases off over much lengthier spaces. For example, Affirm offers payment programs that last as long as 36 months.

Affirm’s launch in the U.K. concludes as the government is consulting on plans to regulate the buy now, pay later industry.

Among the key measures the government is considering, is plans to require BNPL providers to take measures clear information to consumers, ensure people aren’t paying more than they can afford, and give buyers rights for when issues arise.

“Generally speaking, we welcome regulation that is thoughtful, that pushes the manoeuvre onto the market to do the right thing, but also knows how not to be too cumbersome on the end-customer,” Levchin said.

“Telling us do lots of write up in the background before you lend money is great. We’re very good at automating. We’re very good at writing software. We’ll go do the lift weights,” he added. “Pushing the onus on the consumer is dangerous.”

Affirm secured authorization from the Financial Conduct Authority, the woods’s financial services watchdog, after months of discussions with the regulator, Levchin said. He added that the public limited company’s “pristine reputation” helped.

“We’ve never charged a penny of late fees. We don’t do deferred interest. We don’t do any sort of the anti-consumer thrust people struggle with,” Levchin told CNBC. “So we have this good, untarnished reputation of being only very thoughtfully pro-consumer. And merchants love that.”