Shopify To Begin Offering Affirm-Powered Installment Plans To Customers Later This Year

Financial technology services company Affirm will power installment plans on Shopify Inc’s SHOP e-commerce platform, it announced Wednesday.

What Happened

Affirm’s "buy now, pay later" financing plan would be available for eligible Shopify merchants later in 2020, it noted.

Customers would be able to split the total purchase amount into four equal, bi-weekly, interest-free payments. Affirm claims it will not charge any additional, hidden or late, fees.

The San Francisco-based company’s Chief Executive Officer Max Levchin said the partnership with Shopify would allow the company to further its mission of “honest and transparent financial products.”

— Max Levchin (@mlevchin) July 22, 2020

“The age of credit cards is rapidly coming to, I wouldn't call it an end, but a viable alternative in the buy-now-pay-later tools that are built around transparency, clarity, and simplicity, it's no longer a niche,” Levchin further told CNBC.

Why It Matters

The testing of the installment service will commence in the coming months, Affirm disclosed. The fintech firm contended that its merchants that offer customers a similar pay-over-time option have seen a rise in average order value and overall sales. 

A KeyBanc Capital Markets Analyst has increased the price target for Shopify from $1,000 to $1,125 due to the digital momentum the online retailer is experiencing as brick and mortar stores remain shut due to the COVID-19 pandemic. Shopify’s rival BigCommerce also filed for an IPO last week.

Price Action

Shopify shares traded nearly 0.3% higher at $960 in the pre-market session Thursday.