Costco is tapping Affirm to let the retailer’s online shoppers pay over time for a transaction, an option that’s been helping many merchants sell bigger-ticket items and gives consumers more comfort in buying them.
Customers, if approved, will be able to select monthly Affirm payment plans for Costco transactions, according to a shareholder letter Thursday.
Affirm is one of the dominant buy-now, pay-later companies in the U.S., alongside Klarna and offerings from PayPal and Block. The business has gotten more competitive as consumers turn to pay-over-time options in lieu of credit cards, especially as interest rates have increased and inflation remains elevated.
Affirm and Klarna have competed for deals with retailers in the U.S. and Europe. Klarna has brought on Snoop Dogg and Lady Gaga as brand ambassadors in the past to raise its profile. The largest global retailer — Walmart — had a deal with Affirm, but it’s planning to ditch that relationship in favor of Klarna, which recently announced a pact with a Walmart-backed fintech, OnePay.
Costco, the third-largest U.S. retailer, doesn’t currently work with Klarna, according to the Issaquah-based company’s website.