Affirm’s deal with Amazon could help it become an ecommerce power

Amazon will get Affirm in front of millions of consumers. But will Affirm become an ecommerce company?

Affirm’s deal with Amazon could help it become an ecommerce power

Affirm's deal to offer buy now, pay later services for Amazon customers is a big boost for Affirm in the fiercely competitive sector. It's also indicative of a broader change in ecommerce, as Affirm and other buy now, pay later competitors seek to go direct to consumers for all manner of purchases, both online and offline.

The deal, struck last week, was the latest big move in the industry: Square's recent deal to acquire Afterpay for $29 billion indicates how the payments giant views buy now, pay later as key to its merchant and consumer businesses. Apple has also been rumored to be preparing to launch its own buy now, pay later offering with Goldman Sachs. And Visa, Amex and Citi are also jumping in with their own services—as younger consumers seek to use credit cards less.

Buy now, pay later has become "table stakes" for any ecommerce or payments company, says Tom Seo, a fintech venture capitalist at Dash Fund. "Something is wrong if you don't have it."

The agreement will make Affirm deals available to Amazon's customers at checkout to split any purchases worth $50 or more into monthly payments. The two companies have already been testing the feature and will now roll it out over time to all customers.

For Affirm, this will mean an influx of new business from the ecommerce giant's customers. Some portion of those trying out Affirm for the first time on Amazon will likely become repeat Affirm customers. In its fiscal year ending in June 2020, 64% of Affirm's transactions were made by repeat users, the company said.

The deal is "transformative for Affirm, and perhaps represents one of the only merchant deals that could shift the balance of power in BNPL so dramatically," said Matt Harris, partner at Bain Capital Ventures.

Investors were bullish on the news, with Affirm's stock jumping 46% on Monday.

Amazon is just the latest in a string of big partnership deals for Affirm. It also recently announced an exclusive deal with Shopify to run Shop Pay Installments. During its early access period, 1 in 4 merchants saw 50% higher average order volume compared to other methods. Affirm also has merchant deals with Walmart, Priceline and Peloton.

However, the deal is probably not exclusive in the long term and the merchant discount rate, or fee that Amazon pays Affirm, is likely "quite low and maybe even unprofitable. Amazon is not known to make fortunes for its partners," Harris said.

Amazon has already been offering buy now, pay later in some contexts. It works with Zip in Australia, and offers Amazon Pay Later in India with partner banks, reaching 2 million users since launch in 2020.

The retail giant struck a partnership with Citi for certain Citi cardholders to charge their card and then pay over time at a lower interest rate. Consumers who have the Store Card and Amazon Rewards Visa also could pay in installments. Amazon also had made interest-free buy now, pay later options available for years for customers buying some Amazon devices such as Kindles and Fire tablets—devices which bring in more revenue through digital purchases.

But the Affirm deal makes buy now, pay later a much bigger part of Amazon's checkout process, and a standard option.

It also signals that Amazon felt it needed to move into buy now, pay later quickly — without taking the time to build something itself— given the rapid growth in the market.

Through its partnerships with household-name retailers, Affirm wants to connect directly with customers. But that also means it increasingly competes with those buy now, pay later partners for the attention of those customers.

Affirm already has its own app where consumers can purchase installment deals from a range of merchants. It includes deals where Affirm has a partnership with merchants, as well as where it doesn't. At those merchants where it doesn't have deals, it uses a one-time virtual card at the point of sale. (This virtual card can also be used with Apple Pay and Google Pay, which means it can be used in brick-and-mortar stores.)

Affirm says that one-third of its transactions in its most recent quarter were made directly from its app, indicating that Affirm is driving customers to merchants, not just acting as a boost to purchases on merchant websites.

Should Affirm get traction with consumers, Amazon and Shopify are bound to notice. It's always possible Amazon or Shopify could eventually switch to their own BNPL product.

But for now, Affirm's goal is to build up brand affinity with customers as quickly as possible. Amazon, where many customers buy everything from household staples to bigger ticket items, could help do that. While Affirm reported an average of two transactions per consumer in the first 12 months of new customer use as of last June, this deal could boost that much higher to perhaps 10 times per year, Harris said.

"That kind of frequency dramatically increases their consumer relevance, and gives them more of a running chance to build a direct-to-consumer business," Harris said.

Becoming a ubiquitous payment option is one thing, but Affirm's bigger and broader goal is to become a go-to shopping destination for consumers.

Amazon didn't indicate why it selected Affirm over other rivals in the market such as Klarna or Afterpay. Affirm already is large in the U.S. whereas Klarna was originally strong in Europe, though it's growing fast in the U.S. and Afterpay was just acquired by Square. But one reason may be that Affirm does more large installment deals than competitors.

These larger deals are more complex and require more intricate underwriting and capital markets experience, says Jeremy Liew, an early Affirm investor. "Customers want the ability to buy now, pay later not just for the little stuff but for everything," Liew said, which is why larger deals are important.


He couldn’t go to the cabin, so he brought the cabin to his cubicle

"Building forts” has long been a passion of Lucas Mundt's. Now, his employer plans to give out $200 stipends for cubicle decor.

Lucas Mundt scoured Craigslist and Facebook Marketplace to complete his masterpiece.

Photo: Mike Beckham

It took a little work to get viral cubicle-decorator Lucas Mundt on the phone. On Monday, he was taking a half-day to help a friend fix his laminate floor. Tuesday, I caught him in the middle of an officewide Pop-A-Shot basketball tournament. His employer, the Oklahoma water bottle-maker Simple Modern, was getting rid of the arcade-style hoops game, and “glorious prizes and accolades” were on the line, Mundt said. (CEO Mike Beckham was eliminated in the first round, I heard from a source.)

Why did I want to talk with Mundt? His cubicle astonished nearly 300,000 Twitter users this week after Beckham tweeted out photos of it converted into what can only be described as a lakeside cabin motif. Using leftover laminate flooring that he found on Facebook Marketplace, Mundt created the appearance of a hardwood floor, and he carefully applied contact paper to give his cubicle walls, desk and file cabinet the look of a cozy cabin. The space heater that looks like a wood stove? Purely decorative: Mundt runs hot. The two fake mounted animal heads? They’re “kind of ironic,” said Mundt, who’s never gone hunting.

Keep Reading Show less
Allison Levitsky
Allison Levitsky is a reporter at Protocol covering workplace issues in tech. She previously covered big tech companies and the tech workforce for the Silicon Valley Business Journal. Allison grew up in the Bay Area and graduated from UC Berkeley.

COVID-19 accelerated what many CEOs and CTOs have struggled to do for the past decade: It forced organizations to be agile and adjust quickly to change. For all the talk about digital transformation over the past decade, when push came to shove, many organizations realized they had made far less progress than they thought.

Now with the genie of rapid change out of the bottle, we will never go back to accepting slow and steady progress from our organizations. To survive and thrive in times of disruption, you need to build a resilient, adaptable business with systems and processes that will keep you nimble for years to come. An essential part of business agility is responding to change by quickly developing new applications and adapting old ones. IT faces an unprecedented demand for new applications. According to IDC, by 2023, more than 500 million digital applications and services will be developed and deployed — the same number of apps that were developed in the last 40 years.[1]

Keep Reading Show less
Denise Broady, CMO, Appian
Denise oversees the Marketing and Communications organization where she is responsible for accelerating the marketing strategy and brand recognition across the globe. Denise has over 24+ years of experience as a change agent scaling businesses from startups, turnarounds and complex software companies. Prior to Appian, Denise worked at SAP, WorkForce Software, TopTier and Clarkston Group. She is also a two-time published author of “GRC for Dummies” and “Driven to Perform.” Denise holds a double degree in marketing and production and operations from Virginia Tech.

Ripple’s CEO won’t apologize for taking on the SEC

“The SEC declared war on Ripple. We’re defending ourselves.”

Ripple CEO Brad Garlinghouse isn’t apologizing for his company’s pugnacious stance with regulators.

Photo: Ripple

Ripple just bought back a huge chunk of its shares this week, which CEO Brad Garlinghouse touted as a sign of the crypto company’s momentum.

But he also used the opportunity to hit back at the agency that the crypto powerhouse considers its nemesis: the SEC.

Keep Reading Show less
Benjamin Pimentel

Benjamin Pimentel ( @benpimentel) covers crypto and fintech from San Francisco. He has reported on many of the biggest tech stories over the past 20 years for the San Francisco Chronicle, Dow Jones MarketWatch and Business Insider, from the dot-com crash, the rise of cloud computing, social networking and AI to the impact of the Great Recession and the COVID crisis on Silicon Valley and beyond. He can be reached at or via Signal at (510)731-8429.

Boost 2

Can Matt Mullenweg save the internet?

He's turning Automattic into a different kind of tech giant. But can he take on the trillion-dollar walled gardens and give the internet back to the people?

Matt Mullenweg, CEO of Automattic and founder of WordPress, poses for Protocol at his home in Houston, Texas.
Photo: Arturo Olmos for Protocol

In the early days of the pandemic, Matt Mullenweg didn't move to a compound in Hawaii, bug out to a bunker in New Zealand or head to Miami and start shilling for crypto. No, in the early days of the pandemic, Mullenweg bought an RV. He drove it all over the country, bouncing between Houston and San Francisco and Jackson Hole with plenty of stops in national parks. In between, he started doing some tinkering.

The tinkering is a part-time gig: Most of Mullenweg’s time is spent as CEO of Automattic, one of the web’s largest platforms. It’s best known as the company that runs, the hosted version of the blogging platform that powers about 43% of the websites on the internet. Since WordPress is open-source software, no company technically owns it, but Automattic provides tools and services and oversees most of the WordPress-powered internet. It’s also the owner of the booming ecommerce platform WooCommerce, Day One, the analytics tool and the podcast app Pocket Casts. Oh, and Tumblr. And Simplenote. And many others. That makes Mullenweg one of the most powerful CEOs in tech, and one of the most important voices in the debate over the future of the internet.

Keep Reading Show less
David Pierce

David Pierce ( @pierce) is Protocol's editorial director. Prior to joining Protocol, he was a columnist at The Wall Street Journal, a senior writer with Wired, and deputy editor at The Verge. He owns all the phones.

The Twitter account Elon Musk would pay to delete

‘I’ve put a lot of work into it, and $5k is just really not enough.’

Elon Musk considers the Twitter account a security risk.

Photoillustration: Brendan Smialowski/AFP and Getty Images Plus; Protocol

“Can you take this down? It is a security risk.”

That’s how Elon Musk opened a conversation with 19-year-old Jack Sweeney over Twitter DM last fall. He was referencing a Twitter account, called @ElonJet, which tracks the movements of his private jet around the world.

Keep Reading Show less
Veronica Irwin

Veronica Irwin (@vronirwin) is a San Francisco-based reporter at Protocol, covering breaking news. Previously she was at the San Francisco Examiner, covering tech from a hyper-local angle. Before that, her byline was featured in SF Weekly, The Nation, Techworker, Ms. Magazine and The Frisc.


Intel must spend $100B in Ohio now to avoid spending more later

Forget the politics. Here’s why Intel’s new factories in Ohio are crucial to the company’s future and its hope of regaining the chip manufacturing leadership spot.

Intel is doubling down on its own contract manufacturing business for fabless chipmakers.

Photo: Walden Kirsch/Intel Corporation

Intel’s plans to invest up to $100 billion in a new group of chip factories outside Columbus, Ohio, will have a much greater impact on the future of its manufacturing division compared to any short-term political or supply-chain concerns it might solve.

To hear President Joe Biden, U.S. Commerce Secretary Gina Raimondo and Ohio Governor Mike DeWine tell it, the new factories — known as fabs in this world — are going to help fix inflation, make the U.S. more competitive, drive down the soaring cost of cars, ease the chip supply-chain shocks and improve U.S. national security. That’s a lot, even for one of the biggest projects in Intel’s storied history. It will be years before that capacity comes online, and whether a new chip factory in Ohio could actually solve any or all of those issues is debatable.

Keep Reading Show less
Max A. Cherney

Max A. Cherney is a Technology Reporter at Protocol covering the semiconductor industry. He has worked for Barron's magazine as a Technology Reporter, and its sister site MarketWatch. He is based in San Francisco.

Latest Stories