The lender says its loan underwriting involves evaluating transactions by considering credit scores and other pertinent factors, while also incorporating machine learning.
[22] In November 2016, Affirm announced the availability of its buy now, pay later (BNPL) service for retailers using the e-commerce platforms of “Kibo Commerce”, BigCommerce, “AspDotNetStorefront” and Zen Cart.
[16] The company aimed at "building and perfecting a new underwriting system", powered by machine learning, to determine consumer creditworthiness.
Racked added that the four retailers it spoke to reported "significantly higher sales and more frequent purchases, with Affirm customers".
Affirm's use of machine learning in underwriting has also been claimed by the lender to generate "higher loan approval rate compared to its competitors", while ensuring the borrower can "comfortably repay".
[37] In December 2021, the Consumer Financial Protection Bureau (CFPB) said that it was opening an inquiry into BNPL companies including Affirm, Afterpay, Klarna and others.
[8] In the same month, according to a Los Angeles Times report, the "securitization packages" of Affirm's BNPL loans were falling in price for investors to buy while becoming more expensive to issue.
[9] In February 2023, Affirm announced it would lay off 19 percent of its workforce as part of a restructuring plan and shut down its crypto unit.
[45] In March 2023, U.S. News & World Report cited Affirm as a "lower-interest alternative to a credit card", available for both in-store or online purchases, while also stating that "it has downsides".
The company reported over 17 million consumers and 279,000 merchants, and processed an annual gross merchandise volume (GMV) of $20.2bn for its fiscal year ending June 30, 2023.
[47][48][49][50] Then, in September 2023, online travel platform Booking.com joined Affirm's payment network, which also included American Airlines, Cathay Pacific, CheapOair and Vacasa.
The expansion was said to be aimed at sole proprietors, cited by CNBC as the most common form of business ownership in the U.S.[5] That same month, Affirm announced a similar partnership, this time with Best Buy,[52] and the launch of a spending account tied to its debit card.
The company's President, Libor Michalek, stated that the account would offer savings account-type interest, ATM access and "direct deposit" capability.
[2][3][75] Affirm places its installment payment options in the checkout stage — either online or at self-checkout kiosks in physical stores or in a digital wallet — while determining the shopper's loan eligibility in real-time.
[6] The company makes money by earning a commission from merchants and by charging interest on the loans opted for by the consumers.
[12] Affirm states that it evaluates transactions by considering various factors beyond just credit scores, including the time of day and other nuanced details, to assess risk.
Among these products is "Adaptive Checkout" which offers personalized payment options to online shoppers based on user profiles and shopping cart contents.
Using real-time algorithms, it presents pre-approved payment plans with bi-weekly or monthly installments for the shoppers to compare and choose one from.