Amazon has unveiled its first buy now, pay later checkout option for small business owners using its online store. The company has expanded its partnership with Affirm, a fintech company, to offer this service to customers on its Amazon Business platform, which caters to companies. This service will provide loans ranging from $100 to $20,000 and is aimed at sole proprietors and small businesses owned by a single person, which is the most common form of business ownership in the U.S.
The buy now, pay later option, which will be available to eligible customers by Black Friday (November 24), allows users to pay for their Amazon purchases in equal instalments over a period of three to 48 months. The annualised interest rates for these loans will range from 10% to 36%, depending on the perceived risk of the transaction. Importantly, the service is designed to be more transparent than credit cards, as customers will know how much interest they owe upfront, with no late or hidden fees.
Amazon Business, launched in 2015, has grown to reach $35 billion in sales and serves over 6 million customers worldwide. Affirm’s partnership with Amazon Business is significant for the fintech company, as it has been seeking revenue growth after a drop in demand for its instalment payment plans related to expensive Peloton bikes.
This move by Amazon and Affirm is seen as a response to the increasing popularity of buy now, pay later options in the fintech industry, offering a more transparent alternative to traditional credit cards for small businesses managing their cash flow. It is aimed at addressing the financing needs of small businesses, especially sole proprietors, who may find it challenging to access traditional credit from banks. The success of this service with sole proprietors will likely determine whether it expands to a wider range of businesses in the future.