Shopify (NYSE:SHOP) announced on Wednesday it would partner with fintech start-up Affirm to bring its buy now, pay later financing options to participating merchants in the U.S. Beginning later this year, the companies will provide the service for Shopify merchants "who want to offer this flexible payment option to their customers."
When checking out, Shop Pay customers will be given the option to make four equal, bi-weekly, interest-free payments. Affirm will administer the program, meaning merchants will be paid in full, less fees, at the time of the purchase, while Affirm will take care of collecting the payments. At the same time, customers won't be charged any late fees or other service charges.
Affirm is a payment option available at hundreds of online merchants, allowing customers to make installment purchases, and choose a repayment schedule and interest rate at the time of purchase. They then receive email and text reminders when a payment is due. According to Kaz Nejatian, vice president and general manager of Shopify's Financial Solutions Team:
It's critical for businesses to make it easy for their customers to buy from them. Shop Pay Installments helps our merchants offer their customers more payment choice and flexibility, while delivering a seamless checkout experience to boost conversion and overall sales.
Affirm said merchants who offer their shoppers pay-over-time options historically experience an increase in both average order value and overall sales volume.
Since the onset of the pandemic, there's been a groundswell of e-commerce adoption, and as a major provider of online merchant services, Shopify has been among the largest beneficiaries of that trend.