Shop Pay vs Affirm: Which BNPL Option is Best for My Ecommerce Store?

Installment financing offers like Shop Pay and Affirm are becoming increasingly popular payment methods at checkout. But merchants often struggle to determine which solution best fits their ecommerce store and customer needs. By comparing core capabilities around installment plans, customizations, integrations, and analytics between Shop Pay and Affirm, retailers can make smarter financing provider decisions to boost basket sizes and conversion rates.

Quick Answer: Shop Pay provides automatic 4-payment 0% APR financing to all shoppers on 1.7 million Shopify stores. Affirm offers customized 3-36 month loans at transparent 0-30% APRs across 100,000+ merchants on major ecommerce platforms, enabling greater flexibility through underwriting eligibility checks but more deeply customizable experiences.

Comparative Analysis of Shop Pay and Affirm Features:

Background of Shop Pay and Affirm

Overview of Shop Pay

Shop Pay was launched by Shopify in 2017 as a fast and seamless checkout solution designed specifically for Shopify merchants and their customers. It builds on top of the Shopify infrastructure to offer an accelerated one-click checkout experience. In 2020, in partnership with Affirm, Shopify introduced Shop Pay Installments.

Once customers enroll in Shop Pay, their information is securely stored for faster checkout and easier purchasing across any Shopify store. This means customers don't need to manually enter their details like shipping address, contact info or payment methods when checking out from a Shop Pay-enabled store.

As of 2022, over 100 million shoppers have enrolled in Shop Pay, allowing them lightning-fast checkouts across Shopify's vast network of over 1.7 million merchants. The vast scale of Shop Pay's merchant and user base makes it one of the most widely-used accelerated checkout services on the market.

Affirm Company and Product History

Affirm was founded in 2012 by serial entrepreneur Max Levchin with the goal of providing more transparent and fair consumer financial products. Their core offering is customized installment loans that allow customers to split purchases from partner merchants into biweekly or monthly payments.

Unlike other "buy now, pay later" services, Affirm does not charge deferred or compounding interest fees. The terms of each loan, including total repayment costs, are clearly disclosed upfront before the customer completes a purchase. This transparency builds trust and loyalty with Affirm's users.

As of 2022, Affirm has served over 14 million consumers and funded over $20 billion dollars in loans. They have also established partnerships with over 168,000 merchants to integrate their installment loans at checkout. Under Max Levchin's leadership as CEO, Affirm has raised over $1.6 billion USD in funding and has expanded significantly.

With their customized loans, transparent terms, and rapidly growing merchant and user base, Affirm has cemented itself as a major player in next-generation financial services and payments. Their installment financing helps both consumers afford purchases and merchants drive higher conversion rates.

Shop Pay and Affirm Features Compared

Core Features and Capabilities

When it comes to core capabilities, Shop Pay and Affirm share some similarities around flexible installment payments but have some major differences as well.

Shop Pay automatically splits purchases into 4 interest-free installments. These installment payment schedules and amounts are transparently displayed upfront before the customer completes their purchase. Payments are then automatically collected from the shopper's stored payment method on a biweekly basis.

Affirm takes a more dynamic customized approach. When a customer gets to checkout on an Affirm-integrated store, Affirm's platform analyzes their purchase amount, items, and credit profile to determine eligible loan terms, which can range from 3 to 36 months. The term lengths, potential APR ranges, and total repayment costs are all clearly displayed for the user to select their preferred option.

Unlike Shop Pay's fixed 4-installment schedule, Affirm provides a bit more flexibility for customers to choose repayment terms that align with their budget. Affirm also allows rescheduling missed payments within their app, while Shop Pay has stricter payment collection schedules.

Product and Platform Compatibility

When it comes to integration and platform compatibility, Shop Pay and Affirm take very different approaches. Shop Pay was custom-built by Shopify for use exclusively on Shopify stores and Shopify POS systems. This tight focus and integration with Shopify provides accelerated checkout capabilities across Shopify’s expansive merchant network.

On the other hand, Affirm partners with thousands of large and small online stores across all major ecommerce platforms, including Magento, WooCommerce, BigCommerce and others. They also integrate with major POS system providers used by retailers. This cross-platform compatibility allows Affirm to reach consumers across a much wider range of merchants compared to Shop Pay's Shopify-only focus.

Customizations, Configurations and Capabilities

The extent of store customization and configuration also differs between the two platforms. Since Shop Pay is built on top of Shopify, it inherently gains all of the various customization capabilities available across Shopify store themes and the Shopify platform itself. Shop Pay does not offer much proprietary customization and largely relies on Shopify’s existing strengths.

Affirm provides significantly more opportunity to customize the financing experience on both web and mobile to match the look and feel of a merchant’s brand. There are more advanced customization options for risk models, eligibility criteria, display logic in the checkout flow, and more granular reporting available in Affirm. So merchants have much more flexibility to tailor Affirm to meet their business needs.

So Shopify merchants must work within Shopify’s constraints to customize Shop Pay, while Affirm offers a deeper level of configurable customization and integration flexibility.

Shop Pay and Affirm Pricing

Merchant Transaction Fees and Cost Structures

When it comes to merchant pricing and transaction fees, Shop Pay and Affirm take very different approaches.

As Shop Pay is embedded within Shopify Payments, it does not charge any additional or incremental fees to Shopify merchants. The default Shopify Payments transaction rates apply, which are 2.4% + $0.30 per online payment or 2.7% for in-person POS payments. These fees cover both payment processing as well as the Shop Pay installment capabilities.

Affirm employs a more complex merchant fee structure that can be customized based on factors like order volume, average order value, repayment term length, promotional financing, and more. Affirm transaction fees typically fall in the 3-5% range but larger enterprise retailers can often negotiate lower customized rates. There are no monthly account fees and rates are on a per-transaction basis.

So Shop Pay follows Shopify’s flat pricing model while Affirm offers more tailored pricing configurations based on the merchant’s sales profile and negotiated agreements. This dynamic approach can enable larger retailers to optimize their transaction economics.

Financing Costs and Structures for Shoppers

When it comes to costs for customers, the financing offers also diverge quite significantly.

Shop Pay always splits eligible purchases into 4 equal installment payments spread out over a 6 week period. There are no interest charges or additional financing costs passed to the buyer. Installments are simply the original order total divided into 4 parts.

Affirm loans may charge interest with APRs ranging from 0-30% based on the user's credit profile and eligibility. Interest rates are clearly displayed upfront before the buyer completes their purchase so there are no hidden fees. Higher credit users may qualify for 0% APR financing offers. Adding an extra level of transparency, Affirm does not charge compounding interest, hidden fees, or deferred interest plans.

So Shop Pay will universally charge 0% interest to all users, while Affirm borrowers may take on interest bearing installment loans depending on creditworthiness and eligibility for any promotional 0% APR offers at the time of checkout. The interest charged aims to cover Affirm's borrowing costs for funding the loans.

Operational Approach and Processes

Shopper Qualification Criteria

Shop Pay and Affirm take quite different approaches when it comes to qualifying and approving customers for installment financing.

Given Shop Pay's tight integration with Shopify, qualification checks are relatively simple. Essentially any customer completing a purchase from a Shop Pay enabled Shopify merchant will automatically see the quad-pay offer during checkout. The main criteria is that the order total must be between $50-$1,000. There are no credit checks or complex eligibility rules.

Affirm employs a more robust underwriting process leveraging various data sources to determine a given user's eligibility for installment financing. When a customer shops with an Affirm merchant, Affirm's platform runs a soft credit check to determine eligible loan amounts, repayment term options between 3-36 months, and appropriate APRs ranging from 0-30%. Rather than a one-size-fits-all installment plan, Affirm provides multiple customized financing offers tailored to each shopper.

So Shop Pay uses a streamlined qualifications process while Affirm offers real-time tailored financing eligibility decisions.

Payment Timelines and Scheduling

Payment durations and schedules are quite standardized with Shop Pay vs the flexible options with Affirm.

Once approved, Shop Pay always splits the purchase amount evenly over 4 installment payments collected every 2 weeks. The entire loan is repaid within about 6 weeks. There is no ability to reschedule payments if a buyer misses the automatic collection schedule.

In contrast, Affirm borrowers can select their ideal repayment timeframe from 3 to 36 months when checking out. The terms for each loan are clearly displayed upfront before the shopper completes their purchase. Affirm also allows for rescheduling a missed payment from within their mobile app. So there is significantly more flexibility to customize schedules.

Buyer Checkout Experience and User Journeys

The buyer experience for shoppers also differs quite a bit between the two platforms. Shop Pay focuses heavily on accelerating checkout, while Affirm centers more around personalized financing offers.

Once a Shopify customer enrolls in Shop Pay, subsequent purchases leverage a streamlined one-click checkout flow. Payment details are saved and quad-pay installments are automatically split and collected without any additional clicks. While rapid, there isn’t much customization or financing decision flexibility.

Affirm has tailored their user journeys to integrate dynamic financing eligibility decisions right into the checkout flow of partner merchants. As soon as a buyer lands on the checkout page, Affirm runs a soft credit check and provides eligible installment loan options customized specifically for that shopper to select based on the repayment schedules and rates displayed upfront. The focus is providing transparency and choice rather than pure checkout acceleration.

So Shop Pay offers exceptional speed while Affirm provides personalized installment financing terms. Both facilitate easy online installment payments.

Shopper and Merchant Support

Shopper Account Assistance and Issue Resolution

When it comes to assisting shoppers and resolving account issues, Shop Pay and Affirm take quite different approaches.

As an embedded checkout feature within Shopify stores, Shop Pay does not offer direct shopper support. Issues like transaction inquiries, installment questions, payment changes and so on are routed through each merchant's existing customer service channels powered by Shopify.

So the Shop Pay buyer experience is essentially supported by the various Shopify sellers leveraging the accelerated checkout product. The breadth and depth of assistance can vary significantly across the over 1 million Shopify merchants.

In contrast, Affirm proactively manages customer service, account management and issue resolution for all approved loans directly with borrowers. They offer extensive self-service help resources through knowledge bases, FAQs and help centers on their website. For complex questions or problems, borrowers can email Affirm’s support team or call their customer service centers.

So Affirm owns the end-to-end user experience via direct support, while Shop Pay routes buyers to each unique merchant for assistance.

Merchant Onboarding and Partner Support

Similarly, post-integration onboarding and ongoing merchant support looks quite different for both platforms.

As Shop Pay is integrated tightly with Shopify Payments and other core commerce capabilities, onboarding is powered by Shopify’s extensive partner resources, including documentation, webinars, articles and more. Merchants leverage these existing Shopify support models already used to run their businesses.

For Affirm, each retailer is assigned a dedicated account manager to handle integration technical questions, post-launch performance reviews, feature optimization, updated promotional offerings and more. Larger strategic accounts may also get assigned Affirm partnership managers to help plan future initiatives and scale the success of the loans program.

There are also additional resources like Affirm’s Merchant Success Portal, live events and regular check-ins to continuously drive financing program performance. So Affirm takes a high-touch, highly tailored approach with each merchant partner.

Additional Platform Capabilities

Integrations with Online and In-Store Systems

When it comes to platform integrations and compatibility, Affirm supports a significantly wider range of online and offline commerce systems compared to Shop Pay's exclusive Shopify focus.

As a customized checkout capability built specifically for Shopify, Shop Pay is currently only compatible with Shopify powered online stores, Shopify POS systems for brick-and-mortar retail, and Shopify ecommerce channels like social media stores.

In contrast, Affirm offers embeddable financing on over 100,000 merchant sites powered by platforms like Adobe Commerce, Salesforce Commerce Cloud, BigCommerce, WooCommerce and even direct API integrations. Offline, they integrate with major POS solution providers used by top retailers globally.

And through partnerships with players like Amazon, Walmart, Target and more, Affirm loans reach consumers across virtually all major ecommerce channels online and offline. The breadth of integrations spans far beyond Shop Pay's Shopify environment.

Reporting, Analytics and Business Intelligence

The reporting and analytics capabilities provided to merchants also diverge quite significantly.

As an embedded Shopify capability, Shop Pay relies on the native reporting functionality offered by Shopify Payments and other sections of the Shopify dashboard. The data surfaces some basic installment payment performance metrics aggregated at a store level view.

Affirm provides much more customizable, robust reporting to dive deeper into key financing KPIs and transaction trends. The Affirm Merchant Dashboard offers filters to analyze performance by parameters like order volume, repayment terms, APR tiers, approval rates and more. Merchants can easily export these dynamic reports to uncover actionable intelligence.

So Shopify provides high-level installment financing analytics while Affirm enables more tailored views to inform business decisions.

Security, Privacy and Compliance Factors

Finally, security and compliance standards also look quite different. As Shop Pay is delivered through certified Shopify infrastructure, it inherently maintains solutions like Level 1 PCI compliance, ISO certifications, and SOC audits that merchants already rely on.

Affirm adheres to these same strict security protocols but also meets additional standards required for lending-related services like Know Your Customer (KYC) rules, GDPR frameworks in the EU, as well as regular audits as a financial services institution.

So both platforms focus heavily on security and privacy with Affirm operating under extra regulatory guardrails governing financial transactions. Protecting sensitive user data is an essential priority for any payments facilitator today.