In announcing its plans in the UK, Affirm Inc, a major American bnpl service provider is proud to mark its first international expansion. This development is timely as British authorities are seeking to put regulations in place for the fast-growing buy-now-pay-later industry.
Started in 2012, Affirm is classified as a financial technology company (fintech) making trends with its solutions for individuals who wish to make purchases but buy them later over the period of time without paying any extra for being late. The company’s strategy involves evaluating and granting a specific amount of loan for every particular transaction. In the UK, Affirm will avail interest-free and interest-bearing plans, where the latter will use fixed rates based on the principal amount borrowed as opposed to the accumulated principal.
Max Levchin, the Affirm CEO, explained it was quite sensible to choose the UK as the location for the primary international market owing to the extensive patronage from British merchants. He said that the Frozen tongue also makes a good ice breaker. “It’s a big market, which means it is something that we cannot leave behind as a business,” Levchin said in a pre-launch interview. So far, Affirm has signed up with some merchants such as Alternative Airlines and resource and ecommerce payment processing firm Fexco and is looking forward to adding more brands in the next few months.
The UK BNPL landscape is characterized by intense competition, with established players such as Klarna, Block’s Clearpay, and PayPal, which has been active in the sector since 2020. Levchin highlighted Affirm’s distinctive approach, which offers customers longer repayment terms, extending up to 36 months. This sets Affirm apart from competitors who primarily focus on shorter-term financing.
As Affirm embarks on its UK venture, it does so amidst growing discussions about regulatory oversight in the BNPL industry. Proposed measures include ensuring transparent communication with consumers, assessing affordability, and establishing consumer rights for dispute resolution. Levchin encouraged regulation in moderation stating “We appreciate regulation which is reasonable and ensures that the playing field in the market is level and the interests of the users are protected.” In this regard, he emphasized the importance of maintaining the valid consumer viewpoint, which has played an important role in the success of Affirm till date. After long and complicated talks, Affirm was granted registration with FCA in the United Kingdom. As Levchin has already stated, a ‘no late fees culture’ has always been a non-negotiable aspect in all relationships with authorities.
When entering the UK market, Affirm seeks to make responsible and accessible financing offers to clients, aspiring to be at the forefront of the global buy now, pay later (BNPL) evolution.
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