Because of Amazon’s recent partnership with Affirm, an online payment plan service primarily seen and when shopping online fashion brands, the behemoth retailer will be able to offer flexible payment options on its site, allowing shoppers to split the cost of a larger purchase into monthly installments without incurring fees or extra interest.
While Amazon’s new “buy now, pay later” feature is currently in the early stages of rollout and is only available to a select group of customers, the company plans to make it more widely available to their entire customer base in the coming months.
The addition of the new installment plan service could indicate that Amazon is ready to ship customers more than shampoos, charger cords, and $15 jars of Aztec Healing Clay. Affirm is known for assisting retailers in increasing the amount in checkout baskets, and Amazon may be looking to sell more items at higher price points and possibly push access into new markets in order to redirect business away from traditional big-box retailers and into seamless online sales you can order with your voice.
Amazon’s new move into the pay-later arena also represents a broader shift as younger generations gravitate toward alternative lines of credit, though there are still advantages and disadvantages to using any type of loan that should be considered before diving in.
The new pay-later option is straightforward: customers can choose to split purchases of $50 or more into smaller, monthly installments rather than paying the entire cost up front. Users can keep track of what they owe and when they have to pay using an app or the Affirm website, and there are no penalties for paying off the purchase earlier than the original plan.
According to Affirm, the new payment feature will only be available for Amazon categories such as furniture, electronics, and clothing, and will not be available for grocery purchases, including Whole Foods purchases. When you use the feature, you will not receive your purchase any later than usual, so there is no need to worry about having to pay off the entire cost before receiving your order.
The lack of interest rates is a major selling point for the feature, as Affirm stated that while some Amazon customer loans will bear interest, others will be available at 0% APR. Younger generations have valued the ability to pay off their purchases with no interest, believing it to be more dependable than credit cards and the high interest rates that come with them. And, if you choose to make an interest-bearing purchase, this will be made clear from the start.
Parents and people on a budget may also benefit from using the feature ahead of time for the holidays, as Affirm makes it easier to get your shopping done ahead of time without worrying about emptying your wallet in one fell swoop. Affirm positions itself as a more appealing alternative to credit cards because there are no hidden or late fees, so you know exactly what you will owe and when you will owe it from the start.
Buy now, pay later companies like Affirm have seen tremendous success since the pandemic began in early 2020, and have since been in high demand, with the company’s own customer base growing by more than 60% in just the last year. It appears that their success isn’t going away anytime soon; following Affirm’s partnership with Amazon, the company’s stock increased by 48 percent.
Though there are numerous benefits to using a buy now, pay later feature, don’t immediately jump into the appeal with a large purchase you aren’t prepared to pay off. If you do not pay your Affirm monthly installments on time, the company may report your delinquency to Expedia, potentially lowering your credit score.
The buy now, pay later feature isn’t a panacea for avoiding paying full price for Amazon products, but it can be a viable option if you’d rather divide your purchase into more manageable installments over time.