Dive Brief:

• Online retail giant Amazon has agreed to work with buy now, pay later company Affirm to offer some of its online customers the option to pay for goods in installments, Affirm said in a Friday press release. For now, they're testing the new service with a subset of Amazon customers, but in the months ahead, they expect to make it available more broadly to the retailer's customers.
• Only "select" Amazon customers making total purchases of at least $50 will be eligible to use the Affirm "pay-over-time" service, which allows consumers to make monthly payments on their total tab after they agree to terms of financing at checkout. A spokesman for Affirm declined to comment on those terms, but the company's website says that it charges simple interest, not compound interest, without "fees of any kind."
• In a statement, Amazon confirmed the new tie and said: "Amazon is always looking to add flexible payment options, and Affirm does just that by offering transparent pay-over-time solutions that customers can choose from based on their needs, with no late or hidden fees."

Dive Insight:

The new tie comes as Amazon explores alternatives to the traditional credit card payment system, including an announcement recently that it will add a surcharge to Visa credit card purchases in Singapore starting next month because of Visa's "high cost of payments."

Seattle-based Amazon suggested that it might expand the surcharge for payments with Visa, the largest U.S. card network company.

Amazon is teaming with San Francisco-based Affirm as other companies strike up relationships with buy now-pay later installment financing companies.

Digital payments company Square agreed earlier this month to acquire Melbourne, Australia-based buy now-pay later company AfterPay for $29 billion. Square, which has been seeking to build its own banking services, agreed to buy AfterPay at about a 30% premium, underscoring the growing worldwide popularity of BNPL services for consumers seeking new forms of credit.

That consumer trend is dovetailing with rising U.S. congressional interest, and private industry responsiveness, in making more financial services, like lending services, available at lower costs to people who might not have bank accounts or access to credit cards. 

"By partnering with Amazon we're bringing the transparency, predictability and affordability that Affirm provides today to the millions of people who shop on Amazon.com in the U.S.," said Eric Morse, Affirm's senior vice president of sales said in the web post. "Offering Affirm's alternative to credit cards also delivers more of the payment choice and flexibility consumers on Amazon want."

Affirm's credit options are available for purchases at Walmart, Peloton, Ring, Pottery Barn, Adidas and Neiman Marcus, among other retailers and merchants, according to Affirm's website. 

A spokesperson for Affirm declined to comment on the specific credit terms that will be available to Amazon customers. In making the retail loans to consumers, Affirm has in the past offered various lending terms, including maturities that range from one to 60 months, according to a recent Affirm quarterly regulatory filing. 

For the nine months ended March 31, Affirm reported net revenue of $608.7 million, including revenue from its merchant and virtual card networks as well as interest income and gains on the sale of its loans, the filing said.

Just as the number of fintech companies, like Affirm, are increasingly making credit alternatives available, consumer satisfaction with traditional card companies is declining, according to a recent JD Power survey.

Affirm's stock surged on the news of its new partnership with Amazon, which is the biggest U.S. e-commerce company. 

The spokespeople for Affirm and Amazon declined to be more specific about when the Affirm credit options may be more widely available to Amazon customers.