Affirm Launches in the UK as 'Buy Now, Pay Later' Market Awaits New Regulations

Affirm, a leading buy now, pay later (BNPL) provider, has entered the UK market, marking its first expansion outside of North America. This launch comes as UK regulators consider new policies that could enforce stricter guidelines on BNPL providers, aligning them more closely with traditional credit services. Although these regulations are not expected to be implemented until 2026, Affirm aims to establish itself within the market, building trust with both consumers and regulators.

Founded by PayPal co-founder Max Levchin in 2012, Affirm has rapidly expanded in North America, forming partnerships with major companies like Shopify, Walmart, and Amazon. The company recently added Apple to its client list, reinforcing its position in the BNPL sector. Affirm's UK rollout highlights its commitment to responsible lending practices, offering fixed-interest options that eliminate compound interest and not charging late fees or hidden charges, differentiating it from competitors like Klarna.

The BNPL model allows consumers to make purchases on credit, often with interest-free installments, while providers earn through merchant fees. This market has faced criticism for promoting impulse buying and normalizing debt, with calls for regulation to protect consumers from unaffordable borrowing. The UK government’s planned BNPL regulations seek to ensure clearer information, fair borrowing practices, and consumer rights when issues arise.

While Klarna has faced challenges, with valuations dropping post-pandemic, it recently rebounded, reflecting the market’s ongoing volatility. Affirm’s stock similarly fluctuated but has surged, with increased revenue and a focus on profitability. Though it lacks big-name UK partnerships at launch, Affirm has joined with brands like Alternative Airlines and Fexco, with plans for further expansion across the UK and Europe.