An Amazon employee sorts boxes before loading them onto trucks for shipping at Amazon.com’s fulfillment Center in Fernley, Nevada.
Ken James | Bloomberg | Getty Images
The partnership, which was made available to some Amazon users Friday, will allow customers to break up purchases of $50 or more into smaller installments. It also marks Amazon’s first partnership with an installment player, though the company does offer installment options on some items already.
Following the announcement, Affirm’s shares spiked as high as 50% in after-hours trading Friday, while Amazon shares remained unchanged. Analysts at Bank of America called the news an “unambiguous positive,” but said it highlights Affirm’s “technological leadership and strong reputation in the BNPL market.” The analysts also maintained a buy rating on Affirm.
Amazon’s entry into the buy now, pay later space comes as demand for the space continues to heat up, particularly among younger generations who are turning to BNPL platforms instead of traditional credit cards that often come with high interest rates.
This month, Square announced it was entering the space through a $29 billion purchase of Afterpay, and Apple is also planning its own installment partnership with Goldman Sachs, Bloomberg previously reported.
Some of the biggest companies in the space include Affirm, Afterpay and Klarna, most of which do not charge interest payments. Some Amazon customers will bear interest on purchases, Affirm said. Affirm’s other partners include Walmart and Peloton.