Why Leading BNPL Fintech Affirm has Staked UK Claim

Affirm, the US buy-now-pay-later (BNPL) provider that has processed US$75bn in North American transactions, has launched UK operations amid growing scrutiny of the sector's fee structures. The NASDAQ-listed company enters a market where Financial Conduct Authority (FCA) data shows 25% of BNPL users faced late payment penalties in 2023.

The expansion marks a significant shift in the UK BNPL landscape, with Affirm positioning itself as a regulated credit provider from launch. The company, which gained FCA authorisation ahead of entry, aims to differentiate its offering through the absence of late fees and hidden charges.

The rise of buy-now-pay-later

BNPL services, which allow consumers to split purchases into instalments, have faced increased regulatory attention in the UK. Affirm’s model includes credit checks on individual transactions and fixed-interest calculations based on original purchase amounts, without compound interest – a structure that aligns with expected regulatory requirements.

“Affirm was founded on the premise of putting people first and empowering consumers to take greater control over their finances,” says Max Levchin, Founder and CEO of Affirm. “Building on our leadership in the US and Canada, where we partner with top retailers and commerce platforms, we see a significant opportunity to extend our mission of building honest financial products to the UK.

“We know that UK consumers are savvy shoppers who appreciate upfront, no-nonsense products. We look forward to offering them responsible credit options that truly put consumers first and working collaboratively with our UK partners to demonstrate how honest finance is good business.”

Strategic growth

The UK launch follows Affirm's establishment of significant market share in North America, where it serves 50 million consumers through 300,000 merchant partnerships including Amazon, Shopify and Walmart. The company has appointed Ruth Spratt, former UK head of BNPL provider Zip, to lead its British operations.

“The UK's open economy, mature consumer market, and world-class talent makes it the perfect place for the next phase of Affirm's journey,” Ruth says. The company has established a 30-person UK team with plans for expansion.

The move has received support from UK officials seeking to attract fintech investment post-Brexit. Niall Mackenzie, His Majesty's Trade Commissioner for North America, says: “We are proud to have Affirm bring its world-class financial payments platform to UK consumers. Their convenient and transparent credit offering – trusted by millions of consumers in the US and Canada - will offer UK consumers more payment choice and flexibility and help retailers better serve their customers. 

“Affirm’s investment in the UK and commitment to hiring a tech-savvy workforce underscores their confidence in our economy, and we look forward to partnering with them as they continue to invest, grow and expand in the UK.”

Regulatory context

Affirm's UK launch comes as the FCA prepares new rules for BNPL providers. The company's model of conducting credit assessments for each transaction and eliminating late fees positions it for compliance with expected regulations. This approach contrasts with existing providers who have faced criticism over fee structures and credit checking processes.

The expansion represents a significant bet on the UK consumer credit market, with Affirm bringing its established technology platform and compliance framework to a sector under transformation. “Their substantial investment will not only help create tech-savvy jobs but underscores their confidence in the UK economy,” says Poppy Gustafsson, Minister for Investment.

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