Afterpay said on Wednesday it will allow some of its U.S. users to shop at merchants the Australian 'buy now, pay later' (BNPL) firm does not partner with, such as Amazon, further squeezing competition in the booming sector.

The BNPL firm expects to let all its users be able to make purchases by fall this year at 13 large U.S. merchants, including CVS, Dell, Kroger, Macy's, Nike, Nordstrom, Nordstrom Rack, Sephora, Target, Victoria's Secret, Walgreens, and Yeti.

The move marks a shift by the Australian fintech star, which had so far limited customers to just its partner merchants.

Rivals such as Klarna and Zip Co Ltd's Quadpay offer their users an option to pay at any store in the United States through their app.

Afterpay currently makes most of its money by charging a fee, between 4% and 6%, to the merchants it partners with, but analysts expect those rates to fall as competition rises.

The company said it would receive "affiliate revenue" from the new merchants, but did not elaborate on the actual numbers.

Burgeoning competition since 2020, when the pandemic sent more shoppers online, is driving BNPL firms to aggressively expand overseas and look at widening their offerings as larger traditional financial firms, such as PayPal Holdings, enter the fray.

The United States, however, remains the sector's biggest prize, with BNPL firms heavily investing in marketing and partnerships.

Afterpay and its main Australian-listed peers have all said they are eyeing a U.S. listing.

At home in Australia, where adoption is high and growth rates are slowing, the upcoming entry of the country's top lender Commonwealth Bank of Australia and PayPal, who are both promising lower fees, has seen Afterpay prepare to offer branded savings account.