US fintech giant Affirm muscles into UK’s buy-now pay-later market

US fintech giant Affirm is launching its buy-now pay-later (BNPL) offering in the UK as it looks to grab a slice of the fast-growing market in a challenge to the likes of Klarna, Clearpay and Zilch.

The San Francisco-based firm said it will initially offer British consumers access to its interest-free and interest-bearing monthly payment options. In the US and Canada, it also enables shoppers to pay across four interest-free instalments every two weeks.

Affirm plans to hire additional UK-based staff this year to support the launch. It currently has around 2,000 staff worldwide, including more than 30 in Britain.

“Many of our partners already operate here, and in evaluating the opportunity, we had a number of early conversations with them to understand if they felt well served by existing players or would be interested in offering Affirm,” co-founder and chief executive Max Levchin told City AM.

“We heard a resounding ‘Yes, please come.'”

BNPL exploded in popularity during the Covid-19 pandemic as consumers flocked to online shopping and sought more flexible payment options amid cost-of-living pressures.

Providers of the mostly interest-free credit make the bulk of their revenue from fees levied on merchants in return for providing BNPL as a payment option at online and physical checkouts.

“We see the UK as a really attractive country to invest in,” Levchin said. “It is one of the largest ecommerce markets in the world and consumers here are sophisticated and savvy, with a clear appreciation for more flexible and transparent payment options.”

Levchin, who in 1998 co-founded the company that would become PayPal, said Affirm had an advantage over some UK BNPL firms in its range of payment options, commitment to credit checks and not charging “hidden fees” or late repayment charges.

Almost a quarter of British BNPL users were charged late fees last year, according to the Centre for Financial Capability. Affirm said any interest applied on its UK loans will be fixed and calculated only on the original principal amount, meaning it cannot compound over time.

The new government last month unveiled plans to bring British BNPL providers under the supervision of the Financial Conduct Authority in 2026, following concerns that a lack of regulation risked driving customers into debt.

“We are big believers in thoughtful regulation that protects consumers,” Levchin said. “And we’re excited to play an active role in how these plans develop.”

The government hailed Affirm’s launch as a sign of confidence in the UK among international investors, which Labour has put front and centre in its plans for growth.

Newly-appointed investment minister Poppy Gustafsson said the “substantial investment” from Affirm’s launch “will not only help create tech-savvy jobs but underscores the confidence in the UK economy”.

Affirm, founded in 2012, claims to have a network of some 50m consumers for which it has processed $75bn in transactions over the last five years. The firm floated on the Nasdaq in 2021 and has a current market value of $13.6bn.

The first brands to partner with Affirm in the UK are flight booking website Alternative Airlines and Irish payments and foreign exchange platform Fexco. The latter firm will enable its international clients with a UK presence to offer Affirm as a payment option to their customers.

Affirm said it expected to partner with more domestic and international brands in the UK over the coming months, adding to its roughly 300,000-strong global network of merchants that includes names like Amazon, Shopify and Walmart.

Its British arm is led by Ruth Spratt, who previously served as UK country manager at Australian-born payments provider Zip.

Spratt said her team will “expediently and deliberately begin growing Affirm’s UK network of consumers and merchants”.