The installment-payment movement has gained the big e-commerce services provider Shopify Inc. as a convert with Wednesday’s announcement that Shopify will offer a credit option to its U.S. customers through Affirm Inc.
San Francisco-based Affirm, an online credit-services provider, said approved Shop Pay customers at checkout will be able to split their total purchase amount into four equal, interest-free bi-weekly installments under Shopify’s new Shop Pay Installments service set to debut later this year. Merchants will be assessed an undisclosed fee, and Affirm will handle payment collection.
“With the acceleration of online spending, many small businesses must reinvent themselves. This includes embracing the rising importance of e-commerce strategies and meeting consumers, particularly young shoppers, where they are,” Max Levchin, Affirm’s founder and chief executive, said in a news release. “By partnering with Shopify, the gold standard of commerce platforms for businesses that want to sell direct to consumers, we can help merchants seamlessly enable a pay-over-time option at checkout. In doing so, we’re helping them reach new customers, particularly Gen Z and Millennials, who are looking for more transparent and flexible ways to pay.”
Ottawa, Ontario-based Shopify, which provides e-commerce and payment services for online merchants, generated 68% of its $1.58 billion in revenues last year from the U.S. The company had 1.07 million merchants on its platform as of Dec. 31.
“Shop Pay Installments helps our merchants offer their customers more payment choice and flexibility, while delivering a seamless checkout experience to boost conversion and overall sales,” said Kaz Nejatian, vice president and general manager of Shopify’s Financial Solutions Team, said in the release.
Wednesday’s announcement marks yet another installment-credit option becoming available for merchants to offer consumers in hopes of generating more sales. Affirm last year struck a credit deal with Walmart Inc. Just last week, Visa Inc. announced it is working on U.S. pilots for a new installment-payment service. TSYS, part of merchant processor Global Payments Inc., will be the first issuer technology partner, with Commerce Bank as the first U.S. bank partner.
Affirm, which says it serves 6,000 merchants, and Shopify say they will test Shop Pay Installments with an undisclosed number of merchants in the coming months before rolling it out some time before year’s end.