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Fintech Lender Affirm Leans on Investors to Fund Rapid Growth

The Wall Street Journal

Fintech lender Affirm Holdings Inc. is relying more on financing from investors instead of lenders to fund its growth as its “buy now, pay later” installment plans are becoming more popular.

“Buy now, pay later” loans often appeal to customers who don’t qualify for credit cards or prefer fixed-payment plans. Consumers spent between $15 billion and $20 billion using such loans on e-commerce purchases in 2020, up from $6 billion to $9 billion in 2019, according to estimates from credit ratings firm DBRS Morningstar.

“Buy now, pay later” has also been a focus of recent deal activity. Payments company PayPal Holdings Inc. this month said it would purchase Japanese startup Paidy Inc. for $2.7 billion, following an agreement last month by Square Inc. to acquire Australia’s Afterpay Ltd. for $29 billion.

San Francisco-based Affirm offers short-term loans to customers at the point of sale—for example when checking out online—with payment terms ranging from three months to five years. The company, which went public in January, offers its “buy now, pay later” loans through partnerships with companies such as Walmart Inc., Inc. and Peloton Interactive Inc. Gross merchandise volume, which measures all retail transactions on Affirm’s platform net of refunds, was $2.5 billion during the quarter ended June 30, about double the amount from a year earlier.

Affirm to Participate in Upcoming Investor Conferences