US BNPL giant Affirm launches UK operations

Buy now, pay later (BNPL) heavyweight Affirm has made its first major international expansion, launching operations in the UK market with a promise to deliver transparent, consumer-friendly credit options. The move positions the US-based fintech to compete with established players like Klarna and Clearpay in one of the world’s largest e-commerce markets.

Founded in 2012 by PayPal co-founder Max Levchin, Affirm brings significant financial muscle to the UK, having processed more than $75 billion in transactions across its North American operations over the past five years. The company, which went public in 2021 and currently holds a market value of $13.6 billion, serves a network of approximately 50 million consumers globally.

The Financial Conduct Authority (FCA)-authorised lender is entering the UK market with both interest-free and interest-bearing monthly payment options. In a notable departure from industry norms, Affirm emphasises that it will not charge late fees or hidden charges – a significant differentiator given that nearly a quarter of UK BNPL users faced late payment penalties in 2023, according to the Centre for Financial Capability.

“We know that UK consumers are savvy shoppers who appreciate upfront, no-nonsense products,” said Max Levchin, Affirm’s CEO. “We see the UK as a really attractive country to invest in. It is one of the largest e-commerce markets in the world and consumers here are sophisticated and savvy, with a clear appreciation for more flexible and transparent payment options.”

The company’s UK launch comes at a pivotal time for the sector, with the government recently announcing plans to bring BNPL providers under FCA supervision by 2026. Levchin expressed support for the regulatory direction, stating, “We are big believers in thoughtful regulation that protects consumers.”

Initially partnering with flight booking site Alternative Airlines and fintech processor Fexco, Affirm plans to expand its UK merchant network significantly. The company’s British operations, led by former Zip country manager Ruth Spratt, currently employ 30 people, with plans to increase the workforce throughout the year.

The launch has received government backing, with Investment Minister Poppy Gustafsson highlighting its economic implications: “Their substantial investment will not only help create tech-savvy jobs but underscores their confidence in the UK economy.”

Affirm’s entry marks a significant development in the UK’s BNPL landscape, particularly given the company’s emphasis on longer-term payment options – offering plans up to 36 months – and its commitment to underwriting every transaction. The company stresses that any interest applied on UK loans will be fixed and calculated only on the original principal amount, preventing compound interest accumulation.

The expansion represents Affirm’s first venture outside North America, following its exit from the Australian market less than two years ago. With over 300,000 global merchant partners, including major names like Amazon, Shopify, and Walmart, the company appears well-positioned to challenge the UK’s established BNPL providers.

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