🛫 New Entry in the UK BNPL Market
Affirm, the U.S.-based buy now, pay later (BNPL) company, has launched in the U.K., marking its first venture outside North America. Founded in 2012 by Max Levchin, a co-founder of PayPal, Affirm first expanded into Canada in 2022. The U.K. launch comes at a pivotal time as British regulators review BNPL services and consider new rules. While the regulation isn’t expected until 2026, Affirm hopes to gain ground with U.K. consumers and regulators before the new standards take effect.
📊 Affirm’s Strategy to Compete in the UK
Affirm’s U.K. launch includes strategic features to stand out in the crowded BNPL field. Unlike Klarna, Affirm has stated it will not charge late fees or other hidden charges. Interest-bearing plans will only calculate interest on the original borrowed amount, a policy intended to appeal to customers wary of accumulating debt. Though Affirm lacks its high-profile U.S. partners like Amazon and Apple, it has already begun local partnerships, starting with Alternative Airlines and Fexco, with more brands expected to follow.
📉 A Volatile Year for BNPL Companies
The BNPL sector has faced a rollercoaster few years. Klarna’s valuation dropped from $45B in 2021 to $6.5B, though it has now rebounded to $14.6B. Affirm has faced similar challenges; its market cap fell from $47B post-IPO to under $3B last year. Affirm’s 2024 valuation has now risen to over $13B, thanks in part to a 48% revenue growth in Q4 and narrowed losses. CEO Max Levchin is optimistic about reaching profitability by 2025, a milestone that could solidify Affirm’s standing in the market.
📈 Positioning for Future Expansion
Affirm’s Chief Revenue Officer, Wayne Pommen, indicated in March that the company is looking to expand where its partners, like Amazon and Shopify, already operate. Although it’s starting small in the U.K., Affirm’s presence could grow with additional partnerships. Affirm has already hired 30 employees locally, including Ruth Spratt to lead the U.K. team. Affirm follows a remote-first model, giving it flexibility in hiring. With further expansion plans under wraps, Affirm says it will approach growth “with discipline” across the European market.
Will Affirm’s no-late-fee approach win over UK users?
