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Buy now, pay later (BNPL) giant Confirm It is launching in the UK, its first market outside of North America.
Its long-awaited arrival comes as UK lawmakers consider new rules to bring BNPLs in line with other traditional consumer credit services, although these laws are not expected to come into force until… At least 2026 – Enough time for Affirm to build traction and win over consumers and regulators alike.
Founded in 2012, Affirm emerged from a startup incubator called HVF, founded by a PayPal co-founder. Max Levchin (pictured above) who eventually took the reins at Affirm in 2014 to propel its business career. The company expanded outside the United States and into Canada In 2022and has struck lucrative partnerships with major e-commerce companies over the years — Affirm has been Shopify’s main financial partner for nearly a decade, not to mention Walmart, and Amazon, which chose Affirm as Amazon Pay’s first BNPL partner in the US last year. Recently, Affirm also secured powerhouse Apple as a client.
“Debt normalization”
The BNPL model is simple: customers are invited to buy goods on credit, repaying debts in several interest-free instalments, with the BNPL provider generating income through merchant fees. Or, when the customer requires a longer repayment period, the loan may also include interest.
The BNPL market has long been on the UK regulatory radar, with established companies such as Klarna and… clearby It is often criticized for encouraging impulsive buying and Debt normalization. The UK Financial Conduct Authority (FCA) has done this so far Some power to keep BNPL providers in checkBut there are key exceptions, such as services involving interest-free credit, where fixed-sum agreements stipulate that debts must be repaid within 12 months.
But new rules being implemented could bring BNPL companies fully in line with other consumer credit companies. Labor government last month Announce A new consultation for BNPL, with plans to introduce regulation “to ensure people using BNPL products get clear information, avoid unaffordable borrowing, and have strong rights when problems arise”.
It is clear that Affirm is already seeking to position itself favorably with both sponsors and authorities. In fact, the company notes at the UK launch that interest-bearing payment options will not include compound interest – instead, interest will be fixed, calculated entirely on the original amount borrowed.
It is also worth noting Klarna I started charging late fees In the UK last year, this is one area where Affirm has begun to differentiate – saying it will not charge late fees or any other “hidden fees”.
Face to face
It has been a bumpy few years for the BNPL sector. Klarna was valued at more than $45 billion in 2021, a figure that quickly fell by 85% to $6.5 billion after the significant “correction” that many companies suffered after the pandemic – however, news emerged last week that the valuation “Klarna” It rose again to $14.6 billion. It’s been a similarly turbulent time for Affirm, whose ups and downs have followed a trajectory reminiscent of its European rival.
Following its 2021 IPO, Affirm saw its market capitalization reach massive heights of $47 billion, but its stock took a massive hit, with its market capitalization falling below $3 billion last year. However, Affirm shares will rise to more than $13 billion in 2024, with the stock market listing on the Nasdaq. The company reports recently Q4 revenues jumped 48% year-over-year, and losses fell from $206 million to $45 million. Levchin also predicted profitability in 2025.
We’ve known for some time that the UK will likely be Affirm’s next point of contact outside of the US and Canada, with the company’s chief revenue officer Wayne Bowman scores Let’s say it will target markets where some of its largest existing partners are already present.
As for its UK launch, there aren’t any of the same big-name brands it has locally, but the fact that it counts the likes of Amazon, Shopify and Apple as clients in the US means it won’t be huge. Stretching to expand these brand partnerships into the UK for now, though, Affirm will market with the likes of flight booking site Alternative Airlines and payments processor Fexco, with “additional UK and international brands expected to follow”.
In the lead-up to today’s launch, Affirm told TechCrunch that it has already hired 30 employees in the region, including Ruth Spratt Which is leading the local charge, while also looking to increase its staff numbers over the remainder of the year. And the same The first remote soul is somewhere elseworkers are not tied to a specific physical center.
The company has not confirmed its upcoming plans for growth in Europe or elsewhere, although it said it “will take the same disciplined approach” it has always taken to any future expansion.
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