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Amazon & Affirm’s BNPL Service Aids Small Business Growth

BNPL | Nov 7, 2023

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Amazon is introducing a buy now, pay later (BNPL) option with partner Affirm, targeting small business owners who utilize Amazon Business, the e-commerce platform designed for company purchases.

  • The Buy now, pay later service, which is expected to be available to all eligible customers by Black Friday, November 24, offers loans ranging from $100 to $20,000.  Pay for their purchases in equal installments over a period of three to 48 months, with an annualized interest rate between 10% and 36%, depending on the transaction's risk as assessed by Affirm.
  • Affirm's Chief Revenue Officer, Wayne Pommen, highlighted the challenges small businesses face in obtaining credit, noting that this service could significantly aid in their growth and cash flow management.

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  • It is tailored specifically for sole proprietors, as they represent the majority of small businesses in the U.S., with 28 million registered.
  • The BNPL option is an addition to the existing payment methods such as credit cards and invoices, providing small business customers with the ability to pay over time.

BNPL Trends and Impact in 2023

  • The BNPL payment value in the US is expected to grow at an annual rate of 14.8% from 2023 through 2027. This marks a slowdown from the explosive historical growth, signaling a maturing market.
  • To stay ahead, BNPL fintechs are developing their digital wallet ecosystems, launching marketing campaigns that span generations, and highlighting their appeal to higher-income users to their retail partners. This strategic pivot is essential to outflank emerging competitors in a crowded space.
  • BNPL is putting many GenZ into debt risking a bubble:  Despite the appeal of spreading out payments interest-free, there's growing concern about the sustainability of the BNPL model, as it encourages increased spending, leads to higher delinquency rates, and operates with minimal consumer protections. While BNPL offers short-term benefits, it may contribute to a new cycle of debt, raising alarms about the potential for a looming credit bubble.
  • As the BNPL market matures, market consolidation is likely to occur. Larger financial institutions and tech companies may enter the space by acquiring existing BNPL providers. This could lead to a more concentrated market with a few dominant players, which could have implications for competition and innovation in the sector.
  • Rising interest rates and inflation have strained consumer spending and the ability to pay off debts, which in turn has pressured the BNPL business models that were previously operating at a loss for market share.  To satisfy investors' demands for profitability, BNPL companies are tightening underwriting, cutting staff, increasing prices, and retreating from some markets.
  • The sector is also facing potential regulation from the Consumer Financial Protection Bureau and increased competition from tech giants like Apple.

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The BNPL sector is at a critical juncture where growth is stabilizing, and companies are seeking new ways to maintain their momentum. The trends above will play a significant role in shaping the future of BNPL services and their impact on the broader financial and retail landscapes.


NCFA Jan 2018 resize - Amazon & Affirm's BNPL Service Aids Small Business GrowthThe National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, artificial intelligence, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org

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