In the coming months, Amazon will allow its shoppers to pay for transactions more than $50 over the course of several months. The move will likely increase AOV and sales for Amazon. Inc. announced this week that shoppers can now pay in installments for purchases more than $50 via payments vendor Affirm.

Amazon and Affirm are testing the feature now and plan to make it more widely available in the coming months. With Affirm, shoppers can split up an Amazon purchase into installments over three to 48 months, with interest ranging from 0-30% annual percentage rate. Affirm conducts a soft credit check on the consumer before it agrees to provide financing and to determine how much it will lend. Affirm says the check happens in seconds and does not impact a shopper’s credit score. 

A buy now, pay later option is not new for Amazon, as it offers other financing options, such as with co-branded credit cards or via Amazon Monthly Payments. But, this is the first time Amazon is working with one of the popular pay-in-installment vendors, says Ginger Schmeltzer, senior analyst at financial services research firm Aite Group.

“Most of these [financing options] are credit card based, whereas 85-90% of buy now, pay later installment payments are made via debit card,” Schmeltzer says. “And while buy now, pay later is available to and being adopted by consumers at a wide variety of economic levels, many providers have noted its appeal as a financing alternative for consumers with thin or less positive credit files.”

Shoppers buying now and paying for their purchases over time has increased in recent years, with more shoppers using it and more retailers offering it. Global ecommerce sites offering either pay-in-installment vendors Klarna or Afterpay grew by more than 60% to 90,479 online merchants in December 2020, up from 56,127 merchants in January 2020, according to web measurement firm SimilarWeb Ltd.


Within Digital Commerce 360’s Top 1000—which ranks the top online retailers in North America—27.1% of merchants offer a pay-in-installment feature. Affirm is the most popular among Top 1000 merchants.

“Many consumers have been looking for alternative credit options, either because of interrupted cash flow due to the pandemic, having used up their available credit card limits, or a desire to save their credit line in case they need it—or just to avoid using credit cards altogether,” Schmeltzer says.

Affirm charges merchants a fee when a shopper pays for a purchase using its installment method. The fee is negotiated per retailer, Affirm says without revealing more. Merchants tell Digital Commerce 360 a typical fee is around 3% for a buy now, pay later transaction with various pay-in-installment vendors.

Typically, the cost is worth it, retailers say, as merchants often report higher conversions or higher average order values after implementing an installment button. This will likely be the case for Amazon as well, Schmeltzer says.


“I suspect they will see an increase in AOV and sales, as the ability to pay for a purchase over time tends to make more expensive purchases seem more affordable to shoppers,” she says.

About 12,000 merchants use Affirm’s platform, and it has processed more than 17 million purchases since its 2017 launch, according to Affirm.

Affirm reported it has 5.4 million active consumers in its fiscal third quarter 2021 ended May 10, a 60% increase from the year-ago period when it had 3.3 million active consumers. It defines active consumers as those who have used Affirm in the past 12 months.