Affirm is launching the product in the UK as the buy now, pay later market faces regulatory changes

Buy now, pay later (BNPL) giant Confirm launches in the UK, its first market outside North America.

Its long-awaited arrival comes as UK lawmakers consider latest rules to align BNPL corporations with other traditional consumer credit services, although such rules are usually not expected to return into force until at the least 2026 — long enough for Affirm to achieve traction and gain favor with consumers and regulators alike.

Founded in 2012, Affirm emerged from a startup incubator called HVF, founded by the co-founder of PayPal Max Levchin (pictured above), who eventually took the reins of Affirm in 2014 to fuel its industrial growth. The company has expanded beyond the US and Canada in 2022and has forged lucrative partnerships with major e-commerce corporations over the years — Affirm has been Shopify’s premier financial partner for nearly a decade, not to say Walmart and Amazon, which last yr chosen Affirm as its first Amazon Pay BNPL partner in the U.S. . Recently, Affirm also acquired the mighty Apple as a client.

“Debt normalization”

The BNPL model is easy: customers are encouraged to buy goods on credit, repaying the debt in several interest-free installments, and the BNPL provider makes money from merchant fees. Or, if the customer may require an extended repayment period, the loan may include interest.

The BNPL market has long been on the radar of UK regulators, with existing operators such as Klarna and Clearpay often criticized for encouraging impulse purchases and debt normalization. So far, this has been done by the British Financial Conduct Authority (FCA). certain powers to manage BNPL providersbut there are key exceptions, such as interest-free credit services, where fixed-amount contracts provide for debt repayment inside 12 months.

However, latest rules which are in the pipeline could bring BNPL corporations fully into line with other consumer credit corporations. The Labor government last month announced a brand new BNPL consultation with plans to introduce regulations to “ensure people using BNPL products have clear information, avoid overpriced loans and have strong rights when problems arise”.

It’s clear that Affirm is already attempting to position itself favorably with each customers and authorities. Indeed, for the UK launch, the company notes that its interest-bearing payment options won’t include compound interest – as a substitute, the interest shall be fixed and calculated in full on the original amount borrowed.

It’s also value noting that Klarna began charging late fees last yr in the UK, and this is one area where Affirm goals to distinguish itself – it says it won’t charge late fees or another “hidden fees”.

Directly

It’s been a difficult few years for the BNPL sector. Klarna was valued at over $45 billion in 2021, a figure that quickly dropped by 85% to $6.5 billion following the great post-pandemic “correction” that many corporations have experienced. However, last week news broke that Klarna was being priced rose again to $14.6 billion. It’s been a similarly tumultuous time for Affirm, whose ups and downs have followed a trajectory harking back to its European rival.

After its 2021 IPO, Affirm’s market capitalization reached a staggering $47 billion, but the company’s stock has taken an enormous hit, with its market capitalization dipping below $3 billion in the past yr. However, Affirm’s stock has soared to over $13 billion in 2024, and the company is listed on NASDAQ the company recently reported fourth quarter year-over-year revenue growth of 48% and losses decreased from $206 million to $45 million. Levchin also projected profitability in 2025.

We’ve known for a while that Affirm’s next port of call outside the US and Canada can be the UK, and the company’s chief revenue officer Wayne Pommen is the record holder say it will deal with markets where a few of its largest existing partners are already present.

For a UK launch, it doesn’t have any of the big name brands it has in the domestic market, but the proven fact that it counts the likes of Amazon, Shopify and Apple amongst its US customers means it would not be an enormous deal. For now, nonetheless, Affirm intends to operate in the market through flight booking site Alternative Airlines and payment processor Fexco, and “additional UK and international brands are expected to follow.”

In preparation for today’s launch, Affirm told TechCrunch it has already hired roughly 30 employees, including Ruth Spratt who manages the local branch and at the same time plans to extend employment by the end of the yr. And much like your individual “remote first” ethos elsewhereemployees are usually not tied to a selected physical hub.

The company didn’t confirm its next expansion plans in Europe or elsewhere, but said it will “take the same disciplined approach” it has all the time taken to future expansion.