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Buy Now, Pay Later Lender Shifting Business Model
Affirm seeks to differentiate in a crowded market
Buy Now, Pay Later lenders are everywhere — offering consumers a chance to take products home today and pay over time. With only 25% of the purchase price due at the time of sale, customers make the remaining payments in installments usually two weeks apart. It’s like layaway, except you leave with the product and THEN make the payments.
The BNPL space is not without challenges:
In fact, BNPL users reported higher rates of using traditional credit products, like credit cards or personal loans, than non-users. A whopping 95% of BNPL users reported also having a traditional credit product vs. 86% of non-users.
BNPL users also reported significantly higher rates of account delinquency vs. non-users. They were more than 2.5x as likely to report having any product in delinquency, with 7% of non-users reporting an account in delinquency in the year prior vs. 18% of BNPL users having a delinquent account.
Maybe stats like this explain why BNPL lender Affirm is moving to offer more interest bearing, short-term installment loans.
American Banker reports:
Affirm is now working to shift more of its volume to loans offered at interest…
