Historically, Affirm has been used in less frequent purchases, including exercise bikes or mattresses, Linford noted during the investor conference appearance. But Affirm also wants its customers to tap it for daily transactions, such as coffee purchases. 

Despite the general BNPL industry pitch of allowing consumers to avoid interest with installment payments, Affirm does far more longer-term, interest-bearing loans than its BNPL rivals. For its fiscal year ended June 30, 2023, interest-free loans made up about 32% of the company’s gross merchandise volume, according to Affirm’s most recent annual filing from last August. 

In recent months, the company has been on a mission to become more involved in its customers’ daily and in-person spending, in part through its debit card. The card enables customers to pay for a purchase immediately or request to pay over time through the company’s app. Affirm is launching a spending account tied to the card, executives said in November.

Affirm’s recent performance results are beginning to reflect its direct-to-consumer push, Linford said. The company counted about 700,000 active card users by the end of its fiscal second quarter ended Dec. 31, compared to fewer than 50,000 the same period one year earlier. Transactions per active consumer jumped 24% in Affirm’s fiscal second quarter, to 4.5, according to the company’s quarterly earnings materials. 

Auto lending doesn’t quite align with the company’s pursuit of higher frequency, Linford said. “We want to mean something to more transactions, and not just more dollars – although dollars, too,” he said.

Morgan Stanley Analyst James Faucette pointed out during the conference conversation that Affirm’s approach on car loans contrasts with other lenders, who “end up adding autos pretty quickly” because it can add incremental revenue and fosters more relationships.

Linford acknowledged it’s a topic that’s debated and discussed at Affirm. However, car purchases are “so infrequent and so less deep in connection, even if you’re paying off those loans for a long period of time, you’re not as engaged with the provider of credit,” he said. 

Ultimately, “our focus right now is on finding ways to serve as many consumer transaction modes as possible, because we think that’s a lot more durable,” he said. “We think about it less as just the provision of credit to a consumer, and much more in the engagement in their financial lives.”

By Caitlin Mullen on March 12, 2024
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