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Affirm vs Afterpay: BNPL Business Showdown!

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Affirm vs Afterpay: BNPL Business Showdown!

Buy now, pay later (BNPL) services like Affirm and Afterpay have exploded in popularity among online shoppers and retailers in recent years. The premise is simple - instead of paying for your entire purchase upfront, you can split the cost into multiple interest-free installments over time. This gives consumers more flexibility with their budgets, while allowing retailers to increase conversion rates and average order values.

According to research from Forrester, nearly 25 million U.S. adults had used BNPL services as of 2021. Adoption is particularly high among millennials and Gen Z shoppers. The BNPL market also grew by an astonishing 200% in 2020.

Driving this growth are e-commerce innovators like Affirm and Afterpay, which streamline the digital checkout experience with just a few clicks. Once niche offerings, BNPL platforms have become mainstream thanks to partnerships with giant retailers like Amazon, Walmart, Target, and more. Affirm and Afterpay now facilitate millions of online transactions per day.

With more consumers seeking payment flexibility and interest in BNPL steadily rising, understanding the differences between Affirm and Afterpay is key for both retailers and shoppers when evaluating checkout options.

How BNPL Services Work

Buy Now, Pay Later (BNPL) services have become increasingly popular payment options, especially for online purchases. They allow shoppers to split their payments over interest-free installments or defer payments for a short time.

BNPL provides more flexibility at checkout compared to traditional payment methods like credit cards. Instead of paying the full amount upfront, you can pay a portion at the time of purchase and the rest in pre-defined installments over the next few weeks or months.

For example, a $200 purchase can be split into 4 interest-free installments of $50 each, with the first $50 due at checkout. The remaining installments are then automatically charged to your account every 2 weeks after the purchase.

This allows consumers to buy higher priced items that they may not be able to pay for all at once. BNPL can also help budgeting and financial planning.

Additionally, BNPL removes friction from online checkouts. Shoppers don’t need to fill out long credit applications or go through approval processes. Signing up for a BNPL service is quick and easy.

Approvals are made rapidly based on basic eligibility criteria. This improves conversion rates for retailers as customers are more likely to complete their purchases without being deterred during an arduous checkout process.

Overall, BNPL has grown as it provides more short-term financing options and flexibility to consumers while accelerating conversions for e-commerce businesses. The deferred and installment payments model is mutually beneficial.

Affirm Overview

Affirm was founded in 2012 by Max Levchin, Nathan Gettings, and Jeffrey Kaditz. Levchin also co-founded PayPal and has extensive experience in fintech as an entrepreneur and investor.

Affirm provides flexible financing products to consumers, including point-of-sale installment loans and a buy now, pay later service. Their solutions allow consumers to split purchases into monthly payments over 3, 6, or 12 months.

Key facts about Affirm:

  • Processes over $2 billion in annual sales volume.
  • Works with over 1,000 merchant partners including Walmart, Target, and Shopify.
  • Has funded over 5 million loans to date.
  • Operates in all 50 U.S. states.
  • Employs over 600 people.
  • Went public in 2021 with IPO valuing the company at $9.5 billion.
  • Generated $509 million in revenue in 2020.
  • Has an estimated consumer base of 6.2 million active users.
  • Offers loans from $50 to $17,500.
  • Handles loans itself rather than selling them to banks or investors.
  • Requires soft credit checks but will approve customers across credit score ranges.

Affirm aims to provide honest financial products that improve lives, with a focus on transparency and customer service. Their adaptive checkout offering is designed to increase conversions and grow basket sizes for online merchants.

Afterpay Overview

Afterpay was founded in 2014 by Nick Molnar and Anthony Eisen, who sought to provide consumers with interest-free installment plans at checkout. Headquartered in Australia, Afterpay has since expanded worldwide across North America, Europe, Asia Pacific, and New Zealand.

Some key facts about Afterpay include:

  • 10.5 million active customers globally as of June 2020
  • 55,400 merchants use Afterpay, including major retailers like Nike, Sephora, and Urban Outfitters
  • Processed $15.6 billion in total transactions in FY2020
  • Listed on the Australian Securities Exchange in 2016 with market cap of A$8.7 billion as of June 2020
  • Business model relies on merchant fees rather than interest or late fees from consumers
  • Allows customers to split purchases into 4 interest-free installments over 6 weeks

Afterpay’s installment plans are completely free for customers who pay on time. They approve applicants instantly without credit checks. Their app allows users to track upcoming payments, browse Afterpay merchants, and manage their account.

The “buy now, pay later” service aims to be a budgeting tool that avoids revolving debt associated with credit cards. Afterpay holds customer repayments in trust accounts to provide more security and protection. The company promotes financial wellness and responsible spending among its largely millennial and Gen Z user base.

Feature Comparison

When it comes to features, there are some notable differences between Affirm and Afterpay that retailers and shoppers should be aware of.

Installment Plans

Both Affirm and Afterpay allow shoppers to split purchases into multiple installments. However, Affirm offers more flexibility:

  • Affirm has 3, 6, or 12 month installment plans. Shoppers can choose the option that best fits their budget.
  • Afterpay only offers a fixed 4 installment plan over 6 weeks. There are no other term options.

Affirm also allows purchases under $50, while Afterpay has a $50 minimum. So Affirm may be better suited for lower priced items.

Fees and Interest Rates

Affirm does not charge any late fees as long as payments are made on time. There are also no hidden or upfront fees.

However, interest rates between 10-30% APR may be charged for longer term loans or to customers with lower credit. Rates are clearly displayed upfront before completing a purchase.

Afterpay has a simple fee structure:

  • $10 late fee per each missed installment payment
  • Maximum late fee is 25% of the order value

No interest is charged on Afterpay installments. But repeated late fees can make it an expensive option if payments are missed consistently.

Credit Checks

Affirm runs a soft credit check that does not affect scores before approving loans. They use additional data like purchase history for decisioning.

Afterpay does not perform credit checks at all. Purchases are approved based on capacity to make the installment payments.

So Afterpay may be more appealing to those averse to credit checks or with bad/no established credit history.

Platform Integrations

Affirm has direct integrations with all major ecommerce platforms like Shopify, Magento, and WooCommerce.

Afterpay uses third-party extensions, apps, and plugins to connect with various platforms. So integration may be more convoluted.

Direct API connections also allow Affirm to streamline user data and minimize checkout friction. Afterpay relies on retailers passing data via redirects.

So Affirm may provide a more seamless technical integration, especially for larger retailers.

Checkout Experience

Integrating a BNPL option like Affirm or Afterpay can significantly impact the checkout experience for online shoppers. Retailers need to consider how seamless and easy to use the financing service will be during checkout.

Ease of Use

Both Affirm and Afterpay aim to create a frictionless checkout process. Shoppers can get approved in seconds and complete their purchases with just a few extra clicks. However, Afterpay may have a slight edge when it comes to ease of use.

Afterpay’s checkout integration involves just entering a birth date and the last 4 digits of your phone number. Affirm requires some additional information like income and contact details before providing approval. For mobile users, Afterpay also offers easy checkout through their app.

Conversion Rates

Offering BNPL payment flexibility has been shown to increase conversion rates and average order values for online retailers. Approval rates are generally high, removing a key friction point in checkout.

In a 2018 study, Afterpay merchants saw a 20-30% increase in conversion rates when offering Afterpay installment payments. Affirm also publishes case studies showing double-digit conversion lift.

The seamless integrations allow retailers to present BNPL options early in the checkout process where cart abandonment is common. This can capture more customers through the final purchase stages.


While both Affirm and Afterpay offer plenty of customization for the checkout experience, Afterpay edges out again here.

Afterpay offers more options like showing the total purchase price upfront or hiding Afterpay-specific messaging. Affirm checkout options are more limited but focused on maximizing conversion rate impact.

Retailers have more freedom to mimic the look of Afterpay installments as just another payment option. But Affirm may perform better in terms of driving completed sales.

Retailer Pros and Cons of Affirm and Afterpay

Integrating Affirm or Afterpay can have several benefits for online retailers, but there are also potential downsides to consider.

Increased Sales

  • Offering flexible payment options like BNPL can boost conversion rates and average order values. Customers who may not be able to pay the full amount upfront can still complete purchases.
  • In a 2020 survey, nearly 40% of BNPL users said they likely would not have completed their most recent purchase without the installment plan option.
  • BNPL services may attract new customer demographics that prefer installment plans over credit cards. This can help merchants expand their potential customer base.

Costs and Fees

  • Merchants pay a fee to Affirm and Afterpay for each transaction processed through their service. This can range from 3-8% of the order value.
  • Additional costs include integration, maintenance, customer service, and refund processing fees.
  • Smaller businesses may struggle with the financial overhead, making BNPL services better suited to higher ticket or high volume merchants.


  • Merchants take on a greater share of risk if customers fail to repay installments. Chargeback rates may increase.
  • Technical integrations can be complex, and maintenance issues can disrupt the shopping experience. This may frustrate customers.
  • As BNPL services gain popularity, customers may come to expect the option at checkout. Not offering it could negatively impact conversion rates.

Consumer Pros and Cons

Affirm and Afterpay offer clear benefits for consumers looking to spread out payments on online purchases without paying interest. However, there are some potential downsides to be aware of.

Flexible Payments

  • BNPL services allow shoppers to split purchases into 4 or 6 installments, making large transactions more affordable.
  • Consumers aren’t locked into long-term financing or required to pay interest.
  • Payments can be automated across the installment schedule.

Budgeting and Debt Risks

  • Lack of interest can encourage overspending without financial planning.
  • Missed payments may incur fees, penalties, or hurt credit scores.
  • Depending on the provider, full transaction amounts can still be due even if installment payments are missed.

Data Privacy

  • Extensive data may be collected about shopping habits and credit history.
  • Data partnerships with retailers mean transaction details are widely shared.
  • Consumers should understand and consent to data practices before using BNPL.

While BNPL services offer clear flexibility and convenience, consumers should weigh the risks, especially regarding overspending budgets and accruing fees. Upfront evaluation of terms, costs, and data policies is advised.

The buy now, pay later (BNPL) market has experienced explosive growth in recent years. According to research by Worldpay, the global BNPL market is projected to reach $166 billion in transaction volume by 2023, representing a compound annual growth rate of 21% from 2020.

Several key factors are fueling this rapid growth:

Increasing adoption among millennials and Gen Z: Younger demographics are embracing BNPL services as an alternative to credit cards for big purchases and flexible spending. Retailers targeting these segments are adding BNPL options.

High repeat usage: Over 90% of BNPL users make repeat purchases using these services. The more customers use BNPL, the more it becomes a habit.

New market expansion: BNPL services are expanding internationally at a rapid pace. Emerging markets like India, Southeast Asia, and Latin America present major growth opportunities.

Retail partnerships: Large retailers like Walmart, Amazon, Target are striking deals with Affirm, Afterpay and other BNPL providers. This boosts mainstream visibility.

On the regulatory front, there are growing concerns about lax credit checks, overspending, and debt accumulation with BNPL services. The Consumer Financial Protection Bureau (CFPB) plans to introduce BNPL specific consumer protection regulations. The UK already imposed stricter affordability assessments and advertising rules. Regulation remains light compared to credit cards and other lending.

Technological innovation is also shaping the BNPL space. Services are optimizing algorithms to approve more customers with better underwriting. Artificial intelligence and alternative data help with real-time affordability assessments. New features like Apple Pay and Google Pay integration are streamlining mobile BNPL adoption.

As the market evolves, customers benefit from more choice and flexibility in how they pay while BNPL providers refine products to improve affordability and conversion rates.

Choosing the Right Option for Your E-Commerce

When deciding between integrating Affirm or Afterpay on your online store, there are several key factors to evaluate:


How easily does each BNPL service integrate with your e-commerce platform and payment gateway? Some may offer more seamless, plug-and-play options.

Do they support the required technical features you need for your checkout flow? For example, allowing customers to split payments across multiple credit cards.

Will your customers need to download additional apps or leave your website to complete the BNPL payment? Keeping them on your site provides a better experience.


What are the transaction fees charged by Affirm and Afterpay? Compare the rate structures.

Are there any additional charges for setup, integration, or account management?

Do the services offer discounted pricing for higher transaction volumes?

Customer Experience

How quick and simple is the BNPL approval process for customers at checkout? Easy approvals fuel conversions.

What type of customer support do Affirm and Afterpay provide if issues arise? Responsiveness matters.

Will the BNPL option blend seamlessly into your checkout aesthetic? Or appear tacked on?

Does one choice stand out in terms of providing a more satisfying user experience?

By examining these aspects, you can determine if Affirm or Afterpay is the better fit BNPL partner for your online business. Test them out directly when possible before fully committing to one solution.

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By Abhishek Sebin profile image Abhishek Sebin
Updated on
affirm afterpay bnpl services e-commerce payment options