Affirm has announced its first expansion outside North America, bringing its buy now, pay later options to the United Kingdom.
The company first expanded beyond the United States and into Canada in 2022, but the UK is its first overseas market. Affirm is launching in the UK with two partners: Alternative Airlines, a flight booking site, and Fexco, a global fintech and payments processor.
Affirm has already established partnerships with Shopify, Walmart, and Apple. Last year, Amazon made Affirm the first BNPL partner for Amazon Pay in the United States. As of this summer, Affirm claimed more than 16 million U.S. users.
The move to the UK makes sense for several reasons. In addition to being a springboard for further inroads into Europe, BNPL programs are very popular in the UK, despite its smaller population. Data from the UK’s Financial Conduct Authority (FCA) and the Consumer Financial Protection Bureau shows that a higher percentage of UK consumers used BNPL than those in the United States, even though around three times more U.S. consumers used BNPL than those in the UK in 2022.
“Affirm clearly sees an opportunity with merchant partnerships, and the UK is a great starting ground for later expansion,” said Ben Danner, Senior Analyst for Credit and Commercial at Javelin Strategy & Research. “Comparatively, Affirm is moving into a smaller market for BNPL, but UK consumers have a strong appetite for the product, and merchants are willing to partner. Affirm is clearly ready to adapt to the evolving regulatory framework from the FCA and is prepared for market changes.”
A Growing Market
According to Affirm, the UK’s BNPL market is poised for substantial growth, with payments expected to reach the equivalent of $34.28 billion in 2024, a 15% increase from the previous year. The BNPL industry in the UK is anticipated to maintain a projected compound annual growth rate of 9.8% from 2024 to 2029, when the gross merchandise value is expected to surge to an equivalent of $54.62 billion.
“The UK 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,” Affirm’s UK Country Manager, Ruth Spratt, told PaymentsJournal. “Many of our global partners already operate in the UK. When we were initially evaluating where to go next, they expressed interest in offering Affirm in the UK. There’s an opportunity for a financial player who offers longer payment terms, especially one that is pro-consumer and doesn’t charge late or hidden fees.”
One advantage for Affirm: Nearly a quarter of BNPL users in the UK have incurred late fees, with younger consumers ages 18 to 34 being the most affected. Affirm does not have any late fees or hidden charges.
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