Company expansions are never easy but Affirm is on a mission to widen the scope of its business despite growing discussion on the regulation of the buy now, pay later industry. Affirm has now expanded its services to the UK, marking its first foray overseas. The fintech firm identified a market demand in the UK, and with authorization from the Financial Conduct Authority (FCA), has now made its move with two merchants, Alternative Airline and Fexco.
Affirm’s UK expansion came after its success in North America, where it has served 50 million consumers through 300,000 merchant partnerships, some of which included Amazon, Walmart, Apple, Target, and Shopify.
Affirm Expands to UK Amid Discussions of Regulation of the BNPL Industry
Established in 2012, Affirm is a financial support service that allows buyers to make purchases that they can split into more manageable installments in order to make payments over time. Helping consumers skip the hidden charges and mounting interests that come with credit cards, the service has seen much success in America and Canada and it expects to meet the same profit margins by bringing its buy now, pay later model to the UK.
“With credit cards, the longer you take to pay off your balance, the more expensive your purchase becomes. With Affirm, you always know exactly what you’ll owe and when you’ll be done paying off your purchase,” the company states, and this assurance has greatly helped spur its popularity.
Affirm’s flexible payment options in the UK will include an interest-free and interest-bearing monthly payment plan. The interest calculated will be fixed on the initial principal amount, leaving no room for it to compound and increase over time the longer that a buyer takes to make their payments.
Why Did Affirm Expand Its Buy Now Pay Later Model to the UK?
Max Levchin, CEO of Affirm, explained that there was significant market demand for such a service in the UK, which convinced the company to choose it as its first area of expansion after spending over a year getting things in place for the move.
“There are lots of competitors here who are doing a sensible job serving the market. But when we started doing merchant outreach, just to find out locally, Is the market saturated? Does everybody feel well served?” Levchin said in an interview last week. “We got such an enormous amount of market pull. It kind of sealed the deal for us.”
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.”
As part of the press release announcing Affirm’s expansion to the UK, Spratt credited “UK’s open economy, mature consumer market, and world-class talent” as the primary reason for the decision to bring its services to the region.
Affirm Has a Long-Term Goal to Partner with More Merchants, Expand Into Other Markets
Despite the UK having a smaller market, data shows that consumers in the region show a greater appetite for the service and there are extensive opportunities for merchant partnerships that the company can work with.
Levchin also stated that the easy transition into another English-speaking market made the decision to expand to the UK a lot easier for the company to arrange. There are plans to eventually move to other markets, but this will take more work.
Affirm’s BNPL UK expansion is set to begin with Alternative Airlines, a portal for booking flights, and Fexco, which is a financial service company. More brands are expected to opt into the service in the coming months.
Potential Challenges Affirm Might Face In Its Expansion
Affirm’s BNPL UK expansion comes at a time when the British government is looking into regulating the buy now, pay later sector more seriously. There are regulations that are set to take effect in 2026 under the supervision of the FCA. These policies have been designed to ensure consumers are not at risk of excessive borrowing and losing themselves to debt, however, Affirm does not see this as a challenge.
The company’s business model only approves transactions once it verifies the consumer’s ability to repay the money, and it does not charge any late fees that might add a financial burden to the user. This ensures that Affirm will be able to comply with regulations more effectively than some of its competitors in the market.
Addressing the matter in a discussion with CNBC, Levchin said that the company welcomes the regulation. “Telling us to do lots of work in the background before you lend money is great. We’re very good at automating. We’re very good at writing software. We’ll go do the work,” he added. “Pushing the onus on the consumer is dangerous.”
With confidence in its payment plans and its preparedness to face the upcoming regulations, Affirm’s expansion into the UK looks like it is off to a good start.
