Affirm: Smart Data Provides Edge in BNPL Space

Affirm has an edge over competitors in the buy now, pay later space (BNPL), and its data analysis approach is key to the company’s successful underwriting process, CFO Michael Linford said in an online fireside chat.

The webcast for shareholders addressed a cross-section of questions from retail and institutional shareholders relating to Affirm’s strategy, products, business model and financial results. 

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The company gave shareholders the opportunity to submit and upvote questions using Say Technologies’ Q&A platform, according to a press release last week about the chat.

Using data, Affirm analyzes transactions beyond someone’s credit score and considers factors like the time of day and other seemingly small details to ascertain risk. 

Read more: BNPL Transparency May Be the Missing Link to Customer Loyalty

“We can spot the person who’s least likely to pay better than anybody,” Linford said.

He also pointed to the company’s funding sources as being another particular advantage Affirm has over competitors. Instead of relying on a single source, it uses a mix of funding methods, combining on-balance-sheet financing, securitization programs, and forward flow partners for capital.

That mix and the limited timeframe of its loans mean that Affirm has limited exposure, Linford said. 

Related: Affirm to Release Debit Card With Installment Payment Functionality

The company’s debit+ card is a new product that is expected to gain significant traction in the next three to five years, Linford said. The company is seeing the card becoming “top of wallet” for consumers already.

The debit+ card was released last October with a waitlist and offered consumers a way to pay for purchases between $100 and $1,000 in one to four installments at any store or eCommerce merchant. The card links to a customer’s existing bank account.

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Linford said the BNPL market will be enormous, and there won’t be just one player and one winner.

Apple’s move into BNPL, he said, is just another “datapoint on the inevitability of the shift” in consumer behavior and how payments are made. “In that aspect, it’s a good thing.”