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Amazon announced that it would launch a buy-now-pay-later option for its customers. The e-commerce company stated that it signed a partnership with Affirm, a financial technology company based in San Francisco.

Amazon's Buy-Now-Pay-Later Option

Once the feature goes live, customers at checkout will see the option to pay in a series of monthly installments on $50 or more purchases.

Amazon and Affirm stated that they have already started testing the feature with select customers in an official statement. It is unclear how many customers might see this feature early or what markets the companies are focused on.

Both Amazon and Affirm did not say when the feature would launch worldwide.

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As for the financial terms, Amazon stated that customers would not be charged with any late fees or hidden fees. A spokesperson told Engadget that customers must agree to a soft credit check at checkout first.

The financial terms offered will depend on the person's credit history and the purchase price. Depending on the customer and their order value, they may be offered a three-month installment plan to a 48-month installment plan, with an interest rate from 0% to 30% annual percentage rate or APR.

A spokesperson for Affirm said that whatever interest customers pay related to the loans, they agree to those rates upfront, and there is no compound interest.

Amazon is the latest e-commerce platform to offer the buy-now-pay-later feature. CNBC noted that Affirm already serves 12,000 retailers, including Walmart.

Amazon also recently launched a feature that allows sellers to contact their customers via email for faster transactions.

Amazon in Malls

Aside from the buy-now-pay-later feature, Amazon is also working on opening physical locations across the United States. The said stores will be similar to department stores, according to The Wall Street Journal.

The e-commerce giant is reportedly looking for locations in California and Ohio, and the stores will feature Amazon's private-label goods.

The retail spaces will be 30,000 square feet, smaller than typical department stores but a bit bigger than a regular Best Buy.

Critics found the move ironic because department stores have faded because of Amazon's online success. The e-commerce company took massive market shares from several operators.

However, the company has slowly been making its physical-retail plans clear.

The e-commerce company has more than 20 physical bookstores and 24 Amazon 4-star stores that sell gadgets, electronics, and kitchen products.

Stephen Mihm at Bloomberg said that this plan had been done before. Sears, for example, began as a mail-order business built on convenience that offered several items that exceeded Amazon's inventories.

Customers can purchase a house from Sears, and the components would arrive in a boxcar. The items can be assembled on-site by the buyer.

Then, catalog sales began to decrease, and Sears launched a plan to go into retail too. Amazon clearly wants to do the same thing.

Amazon has already seen how physical retail stores can improve a company's sales.

In 2010 and 2011, the company partnered up with Walmart and Target to carry its Kindle e-reader products, which lasted until the retailers ended the partnership because they no longer want to cater to their rivals.

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Written by Sophie Webster

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