Buy Now, Pay Later: How Affirm Is Disrupting the Retail Credit World

Affirm disrupts retail credit with transparent buy-now-pay-later, using innovative partnerships and tech-driven underwriting. Their app, Google Pay, and Apple Pay integration fuel seamless online and in-store shopping, with up to 25% of transactions occurring in physical stores. A point-of-sale lending pioneer, Affirm expects industry growth and improved consumer experiences.

Buy Now, Pay Later
Richa Dani
Richa Dani
Director of Strategic Partnerships
Read time: 5 min

CNBC recently named partnership innovator Affirm a “Top Disruptor of 2019.” We wanted to find out more about the company shaking up the retail credit company that “offers consumers a buy-now-pay-over-time alternative to traditional credit cards.” Impact’s Richa Dani, Director of Strategic Partnerships, sat down with Amar Shah, Affirm’s Director, Consumer & Marketplace, to find out how Affirm’s innovative approach to partnerships is paying off. 

Richa: Affirm has taken an innovative approach to partnering with brands by enabling consumers to split their purchase into easy monthly payments. How does your underwriting model help reduce your exposure to risk?

Amar: Affirm was founded in 2012 with the mission to provide honest financial products that empower consumers and improve lives. We wanted to create a simple way to offer honest consumer financing that is fully aligned with their best interests – enabling shoppers to split their purchase into easy monthly payments without any hidden interest or late fees. Our technology is a central component of this strategy, and the proprietary underwriting model we use leverages machine learning to help determine risk and affordability. In contrast to traditional FICO scores, which haven’t changed in decades, Affirm looks beyond those scores to other sources of data like cash flow patterns and repayment history to determine a customer’s creditworthiness. This enables us to extend credit to a much broader group of deserving customers.

Richa: What is the difference between your partner program and traditional affiliates? How did your program come about?

Amar: In contrast to more traditional affiliates, which only offer coupons, rewards points, or cash back, the Affirm app gives consumers spending power and immediate savings through 0% and low APR offers. Through these exclusive offers, our app helps connect retailers with high-intent shoppers, enabling them to purchase the items they really want in a responsible and affordable way. Additionally, Affirm’s spending power means that the brands we partner with often see unprecedented lifts in AOV and conversion. 

Over the past seven years, millions of customers have come to love the simplicity and transparency of paying with Affirm as an integrated checkout option at more than 3,000 merchants. In response to customer demands to use Affirm in more places, we built and launched the Affirm app to allow our customers to pay with Affirm virtually anywhere by using a digital card. The app harnesses Affirm’s robust consumer network, enabling brands to be discovered by more than 3 million shoppers and to acquire customers earlier in their shopping journey. Beyond increased traffic, the app connects retailers with high-intent shoppers who are confident in their spending power with Affirm.

Richa: Affirm partners with a lot of the big name brands online and off. Is there a type of retailer that is particularly suited to Affirm’s offering? Any stores you would not approach? What are the limitations? 

Amar: Affirm works with well-known brands across retail like home furnishings, travel, personal fitness, electronics, apparel, and beauty, and more. As nearly two-thirds of consumers are ditching their credit cards in favor of pay-over-time options, it’s become an important acquisition tool for nearly all retailers – big and small – above price points of $100.

While Affirm can be used virtually everywhere via our app, we do not currently enable consumers to finance perishable goods, subscriptions, or B2B purchases.

Richa: You recently launched a new app that allows users to split their payments at nearly any store – even those not officially partnered with Affirm. How does that work?

Amar: As more consumers have come to love the flexibility of paying with Affirm, they’ve asked to use our product at even more retailers. Similarly, as more retailers have asked to add Affirm to their suite of payment options, sometimes the integration can be pretty complex. Affirm’s new app enables consumers to prequalify to see their spending power, which can be used at almost any store via a one-time-use virtual card.

To get started, shoppers can prequalify by providing five simple pieces of information (name, mobile number, email address, date of birth, and the last four digits of their SSN). A credit decision is made within seconds—and it won’t affect their credit score. Qualified shoppers can then continue browsing and add items to their cart. At checkout, they’ll load the card information with the simple tap of a button and select their payment plan. To learn more, you can watch this video.

Richa: How do you work with Impact to manage your program — especially with your new app? How does Impact help you?

Amar: Our partnership with Impact has allowed us to quickly expand our advertiser portfolio, maintain strong relationships with top-tier advertisers, and continue to explore new ways to drive value for brands and consumers. We’re an atypical publisher, but since the start, Impact has understood our goals, seen our value, and is always helping us grow.

Richa: Are you more bullish on in-store than the rest of the industry? With your new app and alignment with Google Pay and Apple Pay, you seem invested in the brick-and-mortar consumer experience. Tell us about how you approach in-store versus online? 

Amar: Rather than separating online from in-store, Affirm is bullish on seamless omnichannel experiences. Customer buying journeys are hardly linear and merchants know this as well, so we want to enable shopping experiences where consumers need them. From the start, we built the Affirm app to allow consumers to pay both online and at any brick-and-mortar store that accepts Apple Pay or Google Pay. This is increasingly important as 24% of consumers want the flexibility to look online and shop in-store. Participating retailers have seen up to 25% of Affirm transactions driven in-store, making the Affirm app a rare omnichannel solution for customer acquisition.

Richa: Where do you see the point-of-sale lending industry going as a whole?

Amar: While Affirm has been around for more than seven years, point-of-sale lending has seen a variety of new players pop up in the past couple of years. We will definitely see the industry continue to pick up steam as retailers are looking to reach more consumers. We’re excited to be at the forefront of the industry, and believe that there will only be more innovative merchant solutions and rewarding consumer experiences in the years to come. Customers are continually looking for better ways to budget, shop, and pay than credit cards allow today.

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