Affirm, Costco Launch BNPL Partnership for eCommerce

Affirm is partnering with Costco to offer online shoppers the option to pay over time for transactions.

The financial services company announced the collaboration Thursday (May 8) in a shareholder letter. Customers, if approved, will be to able select monthly Affirm payment plans when shopping on Costco’s website.

“[We] are proud to announce our online partnership with Costco — a brand and a retailer I have personally admired for a long time because of their unwavering commitment to customer experience and transparency,” Affirm CEO Max Levchin wrote. “It will be a privilege to deliver honest financial products to their members.”

Costco has been looking for ways to use BNPL to drive loyalty for some time. In 2023, the warehouse club chain partnered with Citi for Costco Anywhere Visa cardmembers to access the Citi Flex Pay BNPL option to pay for purchases.

Affirm, for its part, has been expanding availability across several sectors. This month, the company launched a partnership with airline-owned network UATP to enable travelers to use BNPL. In April, fashion retailer Revolve Group announced it was integrating Affirm’s pay later functionality.

The adoption of pay-over-time options has become more prevalent among consumers as an alternative to traditional credit cards, particularly amid rising interest rates and elevated inflation. According to the PYMNTS Intelligence report “Pay Later Revolution: Redefining the Credit Economy,” the size of the BNPL market in the U.S. now amounts to $175 billion and usage is on the rise. Near the end of 2024, 38% of U.S. consumers were using BNPL, up from 24% the year prior.

While some consumers are adopting the payment method by choice, using it to optimize cash flow and manage payment for larger purchases, others are using it out of necessity. Individuals doing so by choice spend more on average using BNPL ($777) than those using it because they have to ($576), according to the PYMNTS Intelligence report “New Data: Defining the New Buy Now, Pay Later Consumer.”

Amid economic uncertainty, many consumers are turning to the option to manage their spending.

“[People] want certainty — especially in an environment where, economically, things are a bit uncertain,” Versatile Credit CEO Ed O’Donnell told PYMNTS in March. “Planning is important and confidence is important — [and with pay later] you can create your own confidence within your own budget.”