Shopify Rolls Out a New Buy-Now-Pay-Later Option in Partnership With Affirm

As the buy-now-pay-later payment model continues to grow in popularity, Shopify is unleashing a new feature that will allow its hundreds of thousands of merchants to offer customers the option of shopping through installment plans. The new product, Shop Pay Installments, will be powered through an exclusive partnership with buy-now-pay-later giant Affirm in the United States. The Ottawa-based ecommerce platform said the new payment plan option will be enabled for all customers by default when they switch on Shopify Payments. The rollout comes after Shopify conducted a beta test of the product last year with a select batch of clients and saw 28% fewer abandoned carts than third-party buy-now-pay-later options had yielded. One quarter of those merchants also saw 50% higher order values. "What we do at Shopify is equip our merchants with the best products to help them succeed," said Saad Atieque, senior product lead at Shopify. "And what we have noticed is that it's been an accelerator for merchants' growth." Pinterest, Shopify Extend Partnership to 27 More Countries Like Affirm's own service, Shopify's Shop Pay Installments offers customers the option to split a price into four separate payments with no interest or additional fees. Atieque said that lack of extra charges was an instrumental factor in Shopify selecting Affirm as its exclusive U.S. partner on the rollout. "What we liked about them is their deep technology expertise," Atieque said. "And the other thing that stood out with Affirm [that we couldn't find] with other buy-now-pay-later companies is the transparency and fees. Their 'no late fees, no hidden fees' model. We feel that it is something that builds upon and furthers the trust that Shopify has maintained with our merchants and buyers." Affirm CMO Greg Fischer said in a statement the company sees the deal as a way to spread its business model to Shopify's extensive customer base. "Shop Pay Installments enables any Shopify merchant in the U.S. to deliver affordability, flexibility and transparency to their buyers at checkout," he said. "We’re excited about introducing the power of Affirm to Shopify’s hundreds of thousands of merchants and, as a result, extending the benefits of buying now and paying later to millions of consumers." A growing industry The deal comes at a time of a massive growth for the buy-now-pay-later industry, as ecommerce in general has exploded amid the pandemic. A recent report found around 58% of Americans report having used a buy-now-pay-later service—up more than 50% from the roughly 38% who said they had done so in a survey the previous year. The model is especially popular with younger generations who might have limited financial resources or lack access to easy credit. Affirm went public in January on the strength of this growth, while Swedish rival Klarna closed a whopping $1 billion funding round earlier this year. The Shopify deal also comes on the heels of Affirm's $300 million purchase of ecommerce returns platform Returnly, which gives it access to another new network of online shopping merchants.