Buy now, pay later company Affirm has entered an agreement to acquire Returnly, an online returns and post-purchase payments company, for about $300 million in cash and equity, a press release shows.
Returnly lets customers obtain an instant merchant credit once starting a return, letting them order a new/replacement item instantly instead of waiting until their return is fully processed.
The company has been used by over 1,800 merchants, helped process more than $1 billion in returns and served over 8 million shoppers.
The transaction is expected to close in the fourth quarter this year and isn’t expected to have a “material impact” on the company’s second half fiscal year results.
“In 2019, Affirm invested in Returnly because we recognized their technology’s ability to help merchants remove friction from returns, drive loyalty, and retain more customers. Store credit, issued before the item is actually returned, is now a practical requirement in highly competitive segments like fashion and lifestyle,” Max Levchin, CEO and founder of Affirm, said in a statement.
Affirm said in the press release that returns are a source of rising costs for merchants, customers returned about $428 billion in merchandise to retailers last year, according to research from the National Retail Federation and Appriss Retail.
“As returns continue to challenge and inhibit commerce, we believe that now is the right time to join forces with Affirm and expand the reach of our mission. We look forward to continuing to serve our customers and help more businesses offer the instant and easy returns experience that their shoppers have come to expect,” Eduardo Vilar, CEO and founder of Returnly, said in a statement.
Levchin helped launch San Francisco-based Affirm to provide consumers a replacement for credit cards, one of the earliest players in the increasingly hot “Buy Now, Pay Later BNPL) market. Its mobile app offers installment loans to consumers at the point of sale.
In late February FinLedger reported about how Affirm’s introduction of a debit card represents the most direct challenge yet to the credit card business from the “buy now, pay later” sector, an industry analyst says.