Buy now, pay later (BNPL) giant Affirm is launching in the U.K., its first market outside North America.

Affirm’s long-anticipated arrival comes as U.K. lawmakers mull new rules to bring BNPL firms into line with other traditional consumer credit services, though such laws aren’t expected to come into effect until at least 2026 — long enough for Affirm to build traction and curry favor with consumers and regulators alike.

Founded in 2012, Affirm emerged from a startup incubator called HVF that was set up by PayPal co-founder Max Levchin (pictured above), who eventually took the reins at Affirm in 2014 to drive its commercial push.

The company expanded beyond the U.S. and into Canada in 2022, and it has struck lucrative partnerships with major e-commerce companies through the years. Affirm has been Shopify’s major financing partner for close to a decade, it has a partnership with Walmart, and Amazon last year tapped Affirm as the first BNPL partner for Amazon Pay in the U.S. More recently, Affirm also secured Apple as a customer.

‘Normalizing debt’

The BNPL model is simple: Customers are invited to purchase goods on credit, and can repay the debt in several interest-free installments. The BNPL provider monetizes through merchant fees, or if a customer requires a longer repayment period, the loan may include interest, too.

The BNPL market has long been on the U.K. regulatory radar, with incumbents such as Klarna and Clearpay often criticized for encouraging impulse buying and normalizing debt. The U.K.’s Financial Conduct Authority (FCA) has hitherto had some power to keep BNPL providers in check, but there are key exemptions, such as services that involve interest-free credit, where fixed-sum agreements stipulate that debts be repaid within 12 months.

But new rules in the works could bring BNPL companies fully in line with other consumer credit companies. The Labour government last month announced a fresh BNPL consultation, with plans to introduce regulation to “ensure people using BNPL products receive clear information, avoid unaffordable borrowing, and have strong rights when issues arise.”

It’s clear that Affirm is already pushing to position itself favorably both with patrons and the powers that be. Indeed, the company noted for the U.K. launch that its interest-bearing payment options won’t involve compound interest — instead, interest will be fixed and calculated entirely on the original amount borrowed.

It’s also worth noting that Klarna started charging late fees in the U.K. last year, and this is one area where Affirm is setting out to differentiate — it says it won’t be charging late fees or any other “hidden charges.”

Head-to-head

It has been a bumpy few years for the BNPL sector. Klarna was valued at more than $45 billion in 2021, a figure that swiftly plummeted by 85% to $6.5 billion following the great post-pandemic “correction” many companies endured. However, news emerged last week that Klarna’s valuation has risen again to $14.6 billion. It has been a similarly turbulent time for Affirm, whose ups and downs have followed a trajectory reminiscent of its European rival.

Following its 2021 IPO, Affirm saw its market cap hit the giddy heights of $47 billion, but its stock took a giant hit afterwards, and its market capitalization dropped below $3 billion last year. However, Affirm’s shares have surged to more than $13 billion in 2024, partly due to the company reporting a 48% increase in revenue in the fourth quarter compared to a year earlier, while losses narrowed to $45 million from $206 million. Levchin also predicted the company would reach profitability in 2025.

We’ve known for some time that the U.K. was likely going to be Affirm’s next port-of-call outside the U.S. and Canada. The firm’s chief revenue officer, Wayne Pommen, went on record this March to say that it would be targeting markets where some of its largest existing partners already have a presence.

Affirm isn’t launching in the U.K. with any of the same big-name partnerships it has back home, but the fact that it counts the likes of Amazon, Shopify, and Apple as customers in the U.S. means that it wouldn’t be a huge stretch to expand such commercial partnerships to the U.K., too.

For now Affirm is going to market with the likes of flight booking site Alternative Airlines and payments processor Fexco. Additional U.K. and international brands are expected to follow.

In the build-up to today’s launch, Affirm told TechCrunch it has already hired about 30 employees, including Ruth Spratt, who’s leading the local charge. It’s also looking to add to its headcount through the remainder of the year. And similar to its remote-first ethos elsewhere, workers aren’t tethered to a particular physical hub.

The company wouldn’t confirm its next plans for growth in Europe or elsewhere, but said that it would be “taking the same disciplined approach” that it has always done to any future expansion.