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Affirm, a leading buy-now-pay-later (BNPL) service in the United States that has managed over $75 billion in transactions across North America, is now launching its operations in the UK, amidst increasing scrutiny regarding the fee structures within the BNPL sector. The company, which is publicly traded on NASDAQ, enters a market where recent data from the Financial Conduct Authority (FCA) indicates that 25% of BNPL users incurred late payment fees in 2023.
This expansion represents a pivotal moment in the UK BNPL market, as Affirm is establishing itself as a regulated credit provider from the outset. Having received FCA authorization prior to its launch, Affirm plans to set itself apart by eliminating late fees and hidden costs associated with its services.
The Surge of Buy-Now-Pay-Later
BNPL services allow consumers to break down purchases into manageable installments but have come under increasing regulatory scrutiny in the UK. Affirm’s approach includes conducting credit checks for each transaction and applying fixed-interest calculations based on the initial purchase price, avoiding the use of compound interest – a method that adheres to anticipated regulatory standards.
“Affirm was created with the belief that people should come first, giving consumers the power to manage their finances more effectively,” stated Max Levchin, the Founder and CEO of Affirm. “Building on our leadership in the US and Canada, where we collaborate with top retailers and ecommerce platforms, we recognize a tremendous opportunity to bring our mission of creating transparent financial products to the UK.”
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