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With e-commerce sales booming, payments players are looking for combinations that can keep online customers engaged and add even more buyers to their ranks.
An example emerged in June as Shopify Inc. and Affirm Inc. announced Affirm’s buy now, pay later service became available to “hundreds of thousands” of U.S. merchants through Shopify’s Shop Pay app. A more specific number was not available. The service allows buyers to pay merchants over time in four installments at no interest and with no fees.
San Francisco-based Affirm said in May adoption by Shopify’s merchant base has gained momentum in recent months, with the number of sellers signing on having climbed to 12,500 in a matter of weeks. Affirm and Shopify agreed a year ago to offer buy now, pay later through the app’s Shop Pay Installments feature.
The Shop Pay wallet is part of Ottawa-based Shopify’s overarching shopping assistant, called Shop, which has approximately 19 million monthly active users, according to information Shopify released in April. At the time, the company said Shop Pay had accounted for nearly $20 billion in total sales since its debut in 2017.
Shopify is betting Shop Pay Installments will boost online sales even more and help retain customers who are already shopping online. The company said checkouts with the service are four times faster than non-BNPL checkouts and “convert at almost double the rate of regular checkouts on mobile.” In a notice Affirm posted last month, chief executive Max Levchin said one in four merchants using Shop Pay Installments in the early going achieved a 50% higher average order volume when compared to “other payment methods.”
Speaking to equity analysts in May, Levchin expressed optimism adoption of Shop Pay Installments would spread quickly. He also set ubiquity among Shopify merchants as a goal. The service, he said, “only makes sense if it’s a pervasive solution across the Shopify merchant base.”
Affirm has enjoyed rapid growth in recent months despite what has emerged as a crowded field of BNPL providers. The company logged $2.26 billion in gross merchandise volume in the March quarter, an 83% increase year-over-year. Active users totaled 5.36 million, up 60%.
Shopify, too, has grown fast, in part due to consumers’ turn to e-commerce as they shifted part of their shopping away from physical stores. The company’s transaction volume came to $37.3 billion in the March quarter, more than double the year-earlier total.
