Affirm Holdings Inc. is adding new payment plans to give customers who get paid every two weeks or once a month more options and help them save money.
With one of the new options, customers can pay in two installments. With the other, they can pay back the full amount whenever they can within 30 days, with no interest. At the moment, users can choose to pay in four interest-free installments or every month, with or without interest.
Vishal Kapoor, who is in charge of products at the company, said in an interview, “People love choices, especially at the checkout.”
Also read: Affirm’s strong earnings show a unique buy-now-pay-later strategy
According to government data, 30% of nonfarm payroll employees get paid every two weeks or once a month. This means that the current options don’t always cover all the ways that employees get paid. People who plan to use their next paycheck to settle their balance could buy things with the goal of paying for them in two installments.
Customers can trust that they’ll be able to pay back the full amount within a certain amount of time with Affirm AFRM, +0.61%, a buy-now-pay-later service the company is best known for. People who don’t have credit cards or are worried about high-interest credit card debt like this service.
As Kapoor sees it, the new options will help Affirm move towards lower “cart floors,” which means that shoppers will use Affirm for more of the things they buy, especially cheaper ones.
Kapoor said, “Now we’re moving very meaningfully into daily and everyday spending.”
Max Levchin, founder and CEO of Affirm, has said that the company wants to “unbundle all payments.” This means that people will have more options besides the traditional pay-in-four or monthly payback options.
These new choices were tested by Affirm. Those people confirmed that customers want more choices, and that giving customers more choices makes them more likely to buy.
Worldpay’s Global Payments Report shows that the value of e-commerce transactions that used buy-now-pay-later services rose by 18% around the world from 2022 to 2023. The report says that buy-now-pay-later will grow at a rate of 9% per year until 2027.
5% of all e-commerce transaction value was made up of “buy now, pay later” deals.
