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The many faces of Affirm
Affirm is more than just a point-of-sale lender. But what exactly are they?
Jevgenijs Kazanins
March 23, 2025 • Estimated Reading Time: 3 minutes
Hey!
Remember the phrase, “It’s a bird! It’s a plane! No, it’s Superman”? That’s what comes to my mind every time I think about Affirm. Is it simply an online lender with a smarter customer acquisition strategy? An up-and-coming credit card challenger? Or is it something else entirely - something we haven’t quite labeled yet?
Affirm has evolved a lot over the years. They started with a checkout button to help customers finance online purchases. Then went on to launch the Affirm Card, a new breed of cards that combines debit and credit capabilities. And now they want to power credit for all debit issuers out there.
But here’s what confuses me most: Affirm says it's “building a new kind of payment network.” Not a lending network. Not a commerce network. A payment network. That suggests Affirm’s ambitions might go far beyond what it is today.
Isn’t it exciting? Let’s dive in!
Jevgenijs
p.s. if you have feedback just reply to this email or ping me on X/Twitter
Affirm as an online lender
Affirm $AFRM ( ▼ 3.86% ) used to be a pretty simple company. You could think of Affirm as an online consumer lender that has figured out a better way to acquire customers by integrating into the checkout process. Instead of getting a credit card or a personal loan, consumers could just use the Affirm button at checkout.
Yes, there was some complexity in the model, as some of the loans were interest-free, with merchants paying interest on behalf of the buyers through the merchant fees. However, the ZIRP era came to an end, and Affirm started originating more and more interest-bearing loans. At some point, one could have reasonably expected that interest-free loans would disappear altogether.
“…roughly 75% of our GMV coming from interest-bearing loans. Another 11% was coming from monthly 0% loans to consumers that were 3 months or longer in terms of the loan term. And then we were about 14% Pay in 4.”
So one can think of the reported “Gross Merchandise Volume” as lending origination volume, and the rest would be the same as for a consumer lender: interest income, cost of funding, credit losses, etc. Nothing unusual, a straightforward business model with several comparable companies.
