Buy now pay later comes to Amazon
Amazon has launched its first “buy now, pay later” scheme in America, sparking speculation that it could be offered around the world.
Amazon has partnered with US pay later firm Affirm, who deal with 12,000 companies including giants Walmart. Initially offered to a select number of customers, the trial is expected to be expanded in coming months before potentially being launched in other countries, including the UK.
In the formal announcement, Affirm senior vice president Eric Morse explained: “By partnering with Amazon, we're bringing the transparency, predictability and affordability that Affirm provides to the millions of people who shop on Amazon in the US. Offering Affirm's alternative to credit cards also delivers more of the payment choice and flexibility consumers on Amazon want.”
An Amazon spokesperson added: “Amazon is always looking to add flexible payment options, and Affirm does just that by offering transparent pay-over-time solutions that customers can choose from based on their needs, with no late or hidden fees.”
Thompson and Holt managing partner Craig Gedey looks at how the system will work and what it could mean for Amazon customers and Sellers around the world.
Gedey said: “The US initiative will be offered to customers when they checkout items they have selected online. As well as their preferred payment method, there will be an option to spread the cost over time through Affirm if the total cost of purchase is over $50. They will then be able to select the number of months they want to spread their payments over and also see if there is any interest payable.
“Customers can then download the Affirm app or join its website, which will provide details, as well as reminders, on payment schedules.
“Looking at the UK market in particular, we have seen the use of buy-now-pay-later growing at a phenomenal speed during the global pandemic. Studies suggest that more than five million people used it in the year after the onset of Covid. Amazon will be fully aware of this trend, and as usual they are reacting quickly to it to strengthen their market position.
“The elephant in the room is whether this has the potential to exploit people who can’t afford certain purchases but are enticed into making them because they can now spread the cost. This issue has already been raised in America, where Affirm have argued that they provide a more transparent and cheaper alternative to credit cards.
“However, a review there revealed that there is a direct correlation between buy now pay later customers, and those already in financial difficulty. Experts believe that much of the risk lies in the fact that people don't really think of BNPL as borrowing, so they don't give it the same kind of thought they would when taking on other types of debt.
“That is an issue that Amazon will undoubtedly have to tackle at some point. But if there is a successful roll out of this initiative in America, expect to see it introduced in Europe as well.”
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