Aiming for "top of wallet" status with buy now/pay later shoppers, Affirm forged a partnership with Amazon in 2021 that gave the BNPL fintech priority within the e-commerce platform's checkout zone for more than a year. But an exclusivity clause in Affirm's arrangement
Amazon this week announced that Citi Flex Pay — Citigroup's point-of-sale installment loan product — will launch within Amazon Pay checkouts for Citi credit card customers. The option has appeared on Amazon.com and on the mobile app since 2020, and is new to Amazon Pay, the e-commerce giant's one-click digital wallet which is embedded in tens of thousands of other e-commerce sites.
Consumers that have linked a Citi credit card to their Amazon account can now split payments for online purchases into installments ranging from three to 48 months on any e-commerce site that supports Amazon Pay, Amazon said in a Wednesday press release.
Affirm remains a prominent checkout option on Amazon.com in the U.S. and Canada — appearing on product pages and during checkout — but Affirm is not yet integrated into Amazon Pay. That's on the roadmap for the future, an Affirm spokesperson said.
Amazon's move with Citi may seem subtle, but card issuers and BNPL providers have begun
"The battle between BNPL providers for consumer loyalty within online checkouts and digital wallets is an updated version of what's been going on at the point of sale forever, where issuers and card networks are trying to stand out," Reef said.
Apple ratcheted up this competition higher last month with the rollout of
Unlike BNPL fintechs that typically form partnerships with e-commerce platforms and merchants to present BNPL offers to consumers — and charge merchants fees of 3% or more to close the deal — Apple Pay Later is available to all merchants that accept Apple Pay through a connection to Mastercard Installments.
With BNPL offers increasingly built into digital wallets and checkouts, merchants may not have to create as many direct partnerships or pay as many fees to BNPL providers, Reef suggested.
"In a tighter economy, merchants are looking more carefully at how much they want to pay an intermediary to push BNPL sales and how much work is required to integrate a BNPL button with their website," Reef said.
Amazon declined to discuss its contractual arrangements with any BNPL providers.
There is no fee for merchants to offer Citi Flex Pay through Amazon Pay. Citi Flex Pay typically charges consumers a lower rate on installment loans than on regular credit card purchases, and through July 31, 2023, Citi will offer its credit card users zero interest on Citi Flex Pay purchases financed over three, six or 12 months, according to the release. Citi Flex Pay, which launched in 2020, adds the monthly installment-loan payments to customers' monthly credit card statement.
Affirm, which will report its earnings for the first three quarters of the year on May 9, is eager to expand its presence through embedded payments and digital wallets, but the checkout experience is just one piece of the puzzle for successfully marketing BNPL loans, according to Wayne Pommen, Affirm's chief revenue officer.
Pommen notes that while Apple Pay Later is concentrating its BNPL efforts within a digital wallet, he believes merchants tend to benefit most when the instant-financing options are promoted broadly across the shopping experience, not merely as a purchase option at checkout.
"Affirm is integrated into a participating merchant's site at every stage of the shopping journey, whereas Apple Pay Later only shows up at the end, inside the Apple wallet," he said.
A consumer shopping online at a merchant integrated with Affirm will see Affirm advertised across the online website or in the store; Affirm often appears on specific product pages with offers to prequalify for a BNPL loan and again as an option at checkout, Pommen said.
Affirm has such partnerships with more than 200,000 merchants including Walmart and Target, along with e-commerce platforms like Shopify, which extend Affirm to thousands more merchant checkouts, according to Pommen.
Like BNPL rivals Klarna and Afterpay, Affirm is also rolling out a debit card enabling users to access Affirm's BNPL financing at the point of sale. Affirm is also
"We're expanding in all directions," Pommen said, noting that in-store purchases remain the majority of retail sales. "We see huge untapped opportunity in reaching more customers through new verticals, both online and through [physical] stores."
