Buy Now Pay Later Fintech Affirm, which filed for IPO, may have significant growth opportunities in the US.


Younger investors, including Millennials and Gen Z consumers, are supporting a shift in the idea of ​​paying with credit, and investors could join this emerging trend in US markets as well.

Fintech company Affirm Holdings Inc., which allows users to divide their purchases into more manageable installment plans, recently submitted an application for an initial public offering (OPI). Affirm’s management confirmed that the Fintech firm intends to list its shares on the Nasdaq. Affirm stated that it plans to streamline or modernize the payments industry by providing payment options for a period of time without interest being charged (for eligible consumers while providing “simple interest” loans for other customers).

Affirm can generate income with these types of payment plans by taking a certain percentage of the end of a merchant transaction. The main idea is that merchants must be willing to pay Affirm to perform risk modeling and provide their service so that it can increase conversions. 0% APR options generally get Affirm to get substantial fees from merchants, based on the company’s prospectus. The Fintech company also offers “simple interest” loans that allow you to earn with fixed interest payments (which are from the end consumer).

Affirming is a notable part of the boom Buy now, pay later (BNPL) Fintech trend, which has been widely adopted by companies around the world.

About 20% of Australia- and Germany-based consumers have been using BNPL’s services, according to Worldpay data. However, MSN reports that these types of payment methods account for only 1% of digital commerce payments made in the United States. This suggests that there could be many opportunities to expand BNPL’s service sector in the US and other parts of the world.

Affirm is currently competing for market share with Sweden-based fintech firm Klarna, which is backed by payments giant Visa. Australia’s Afterpay and travel-focused Uplift are also part of BNPL’s emerging industry.

Affirm plans to trade under the ticker symbol AFRM, with the company’s IPO plans backed by Morgan Stanley, Goldman Sachs and Allen & Co. Affirm management has said the company intends to secure $ 100 million in equity, what he confirmed in his filing with the U.S. Securities and Exchange Commission (SEC). However, this amount may change in future filings.

It is worth noting that Affirm generates income from the fees merchants pay when it helps them finalize a sale and also helps make it easier to pay for the sale. Affirm offers “0% APR financing products” and “simple interest” alternatives. Simple interest payment options is where Affirm can make money on the consumer end of interest-bearing transactions. These interest payments are set in advance and Affirm claims that it does not require clients to pay more than the amount they agreed to (even if they skip the payments).

What confirmed Per MSN, business network revenue accounted for only about 50% of Affirm’s revenue over the last financial year, and interest-generated earnings accounted for about 37% of the Fintech company’s total revenue.

Affirm also made a profit from its loan services, capital gains from loan sales, and its expanding virtual card network.

Affirm also reported that it nearly doubled its revenue for the period ending June 2020. The company notably earned $ 509.5 million during the current fiscal year 2020, which is significantly more than the $ 264.4 million it generated during fiscal 2019. However, Affirm still posted losses of $ 112.6 million. (Last year they reported $ 120.5 million in losses.)

Affirm’s prospectus shows that its “0% APR” payment plans accounted for 43% of the total value of merchandise handled through its platform during fiscal 2019. Affirm also reported that around 6.2 million customers led to carried out approximately 17.3 million transactions at more than 6,500 merchants supported through its platform.

As recently reported, Affirm United with the global payments platform Adyen to support flexible payment plans. In July 2020, Affirm also associated with Shopify to offer BNPL plans to customers.

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