Why is a Giant Retailer Building a Buy Now, Pay Later Business?

It must be the money!

Photo by Marques Thomas on Unsplash

According to this article, the typical merchant fee for Affirm is 5.99% + 30¢ per transaction. Compare that to the typical processing fees for Square, which I personally use to process payments, which is 2.6% + 10¢ per transaction.

So, we’ve established that Affirm charges the merchant roughly 6% to process transactions. And according to a 2021 publisher media kit, Affirm was asking for at least 8% commission to even integrate a merchant. For 10% commission, the merchant would get a dedicated merchant page and optimized premium placement across their homepage or categories. And for 12%, Affirm would offer 0% financing, dedicated page and placements on homepage and categories.

Add in the average 2% network fees and another 2% for program manager fees, and merchants are paying out over 20% of their revenue to Affirm which makes it hard to maintain a healthy profit margin.



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Andy Spears

Writer and policy advocate living in Nashville, TN —Public Policy Ph.D. — writes on education policy, consumer affairs, and more . . .