Affirm

Market position

Described in sources as the largest U.S.-based BNPL financier and, per a 2022 Bank of America Securities assessment, the most frequently used BNPL app in the U.S. with roughly 30% market share. Reuters called it the biggest BNPL firm in the United States in 2022. It competes in a sector that has seen entrants including Apple, PayPal and Block, alongside Klarna and Afterpay.

Affirm positions its offering as transparent consumer credit with no hidden or late fees, including 0% APR Pay in 4 plans, in contrast to traditional credit cards. Its machine-learning underwriting is claimed to yield higher approval rates than competitors while assessing repayment ability, and its multi-channel access — checkout links, virtual cards, the Affirm Card and digital wallet/banking app integrations — extends coverage beyond online checkout into physical retail.

Technology

Affirm underwrites transactions using credit scores and other factors combined with machine learning, an approach the company says produces higher loan approval rates than competitors while assessing whether borrowers can repay. Product-level technology includes Adaptive Checkout, AdaptAI and BoostAI, a consumer mobile app, one-time-use virtual cards, and a physical Visa debit card usable anywhere Visa is accepted in the U.S.

Go-to-market

Distribution is primarily through merchant integrations at checkout, including e-commerce platforms (Shopify, Magento, Salesforce Commerce Cloud, BigCommerce, Kibo Commerce, Zen Cart) and payment processors (Stripe, FIS's Worldpay), alongside direct partnerships with large retailers such as Walmart, Amazon, Target and Apple. Affirm also reaches consumers directly through its mobile app (10M+ Google Play downloads) and the Affirm Card for in-store and online use.

Retail consumers in the United States, Canada and the United Kingdom who want to split purchases into installments, and merchants — from large retailers such as Walmart, Amazon, Target and Peloton to smaller-ticket sellers — that integrate Affirm at checkout via e-commerce platforms and payment processors.

Geography

Services are available in the United States, Canada and the United Kingdom. Headquarters are at 650 California Street, San Francisco, California. The company exited the Australian market in 2023. The Affirm Card is not available to residents of U.S. territories.

History

After launching in 2012, Affirm expanded merchant reach through e-commerce platform integrations in 2016 and launched a consumer app in 2017 enabling loans at any retailer. A Walmart partnership followed in February 2019. Affirm filed for an IPO in November 2020, briefly postponed it, and listed on Nasdaq on January 13, 2021, raising about $1.2 billion; its valuation was reported to double from $12 billion to $24 billion, and Levchin's stake was estimated at $2.5 billion. In 2021 it acquired Returnly for $300 million and signed partnerships with Amazon (including exclusive U.S. BNPL status through January 2023), Target and Apple. A Stripe partnership followed in May 2022 and the Amazon partnership launched in Canada in September 2022. In February 2023 Affirm laid off 19% of staff, shut its crypto unit and exited Australia; in July 2023 it announced it would sunset Returnly and partner with Loop Returns instead.

Risks & controversies

The CFPB opened an inquiry in December 2021 into BNPL providers including Affirm, focused on consumer debt accumulation, applicable consumer protection laws and data harvesting; Affirm said it welcomed the review. Sector-level risks noted in 2022 included rising interest rates, a cost-of-living crisis, increased competition from Apple's entry, and deteriorating economics for securitizing BNPL loans — Affirm funded about a third of its business through securitizations. The company reported a $310 million operating loss on $381 million of revenue in the quarter ending March 2023, laid off 19% of staff, closed its crypto unit, exited Australia and wrote down its strategy around the $300 million Returnly acquisition by sunsetting the platform. Coverage in 2018 cautioned about interest rates charged by BNPL services.