Push the digital wallet: Amazon Pay partners with Affirm

  • Amazon is increasing the push behinds it digital wallet Amazon Pay with a partnership with BNPL firm Affirm.
  • Will diversification of payment options ease Amazon's route to dominance in the digital wallet space?

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Push the digital wallet: Amazon Pay partners with Affirm

Last month, Amazon Pay partnered with Citi Flex Pay to offer Citi card members the ability to pay over time. Almost a month and a half later, it seems there is more where that came from. Now Amazon Pay has announced a partnership with Affirm, which will enable customers to use BNPL at merchant websites that allow payments through Amazon Pay.

More on the news

Amazon’s eligible merchants can opt in to offering Affirm Adaptive Checkout through Amazon’s Seller Central. So far amazon merchants like Casper, USA Berkey Filters, and UltraSabers have already integrated Affirm Adaptive Checkout. Opting in, will allow merchants to offer BNPL payments on their own websites.

A screen shot of USA Berket Filters, that shows the Amazon Pay icon and checkout button on the bottom right with "as low as $34 with affirm" written.
Source: USA Berkey Filters

Considering the competition Amazon Pay faces from established players like PayPal, this new partnership allows the company to gain access to Affirm’s 16 million people in its shopper base. Affirm is also the first BNPL option available through Amazon Pay. 

Through its Adaptive Checkout, Affirm allows shoppers to make bi-weekly and monthly pay-over-time payments, for which they are approved during checkout. The approval process does not impact a customer’s credit score. 

After the approval process shoppers can make payments over time for orders above $50. Purchases like gift cards, digital items, or cart values under $50 are not eligible for BNPL through Affirm. Similarly, any Amazon purchases that need to be shipped out of the U.S are also not eligible. 

Moreover, while checking eligibility for BNPL through Affirm may have no impact on a shopper’s credit score, monthly payments through Affirm may be reported to credit bureaus, according to the Amazon Pay website

Man using Affirm through Amazon and selecting between different BNPL options.

Source: Amazon

Tearsheet take

Amazon’s dominance in the ecommerce space hasn't translated to the digital wallet space, where incumbents like PayPal and new players like Apple Pay have had considerable success. To climb up the ranks, Amazon’s strategy seems to be based on offering more payment options like flexible payments through Citi Flex Pay as well as BNPL through Affirm. This could allow it to gain access to its partners’ customer bases, as well as improve its overall product offering. 

What remains to be seen is whether this strategy will help the ecommerce player thwart the likes of PayPal and Apple – a goal which does not only depend upon consumer preferences but also on merchant adoption. 

As far as Affirm is concerned, the company experienced a 20% increase in its stock value after the news about the Amazon Pay partnership broke. But that uptick has not persisted, as the stock experienced a decrease after macroeconomic concerns around consumer spending became the center of investors’ concerns. But the jury is out on how BNPL will fare going forward, since consumers could also turn to paying over time in the face of limited funds.

On the other hand, one problem Amazon has yet to solve is differentiation when it comes to its digital wallet. One possible way to stand out in this space is through branded partnerships, like the one Amazon announced with Citi Flex Pay. In that case, for Citi card members, checkout through Amazon was singularly appealing because it was the first time Citi Flex Pay was available through a digital wallet.

Another way to stand out in the space could be increasing Amazon Pay’s merchant network and making the digital wallet available on more merchant websites. But this has proved to be a quagmire unto its own, since merchants have historically had a trust issue with Amazon, and the digital wallet is yet to be accepted at large merchant websites like Walmart and Target. 

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