San Francisco-based Affirm Holdings Inc said on Thursday that it is planning to launch its first payment card allowing users to pay for some purchases in installments, as the buy now, pay later (BNPL) sector booms.
Founded in 2012, Affirm has become one of the most well known buy now, pay later firms in the United States, giving consumers the option to easily spread payments for online purchases.
Companies in the sector, including Sweden's Klarna and Australia's Afterpay, have seen business blossom over the past year as consumers shopped online more during the pandemic.
Affirm's card, which it expects to be available later this year, will allow shoppers to split the cost of some in-store purchases over a period of time, but they can still choose to pay up front as with a normal debit card.
The card will offer interest-free and simple interest-bearing loans, said CEO Max Levchin, adding that more than a third of U.S. consumers have used a BNPL service with debit transactions accounting for 30% of all payments.
"Yet, there is no card that currently allows consumers to make the choice between paying upfront or over time. We thought it would be very powerful to combine the two," he said.
Management consultants Oliver Wyman estimate BNPL firms facilitated between $20 billion-25 billion in transactions in the United States last year, but some regulators are concerned that spreading payment encourages customers to spend more than they can afford.
Affirm's revenue rose 57% to $204 million in the second quarter of its 2021 fiscal year. It allows shoppers to split spread purchases over periods ranging from six weeks to four years, with interest rates of 0 to 30%.
(Reporting by Anna Irrera; Editing by Kirsten Donovan) ((Anna.Irrera@thomsonreuters.com; +1 646 223 4005 ;))