Affirm Holdings Inc. CEO, Max Levchin, is confident that the economy is showing signs of resilience despite popular opinions to the contrary. He believes that consumers are not shying away from spending and are utilizing flexible payment options like Buy Now, Pay Later (BNPL) to manage their retail spending.
Levchin emphasizes that people are actively spending and that Affirm is not negatively impacted by high interest rates as some may suggest. He states that as long as job losses are controlled and people can transact and pay their bills, it is beneficial for Affirm.
The company’s BNPL service offers an initial interest-free period of two weeks, with a 15% annual percentage rate (APR) applied after that. Despite economic challenges and inflation, the company’s model continues to attract and retain customers, as evidenced by its financial performance and user growth.
In the past year, the number of active users on Affirm’s platform has increased by 18%, reaching 17.8 million. Revenue has also seen a significant 51% rise, indicating a strong consumer shift towards using debt to manage retail spending. However, this trend highlights broader economic pressures, with the average American saving just 4.51% of their disposable income. The reliance on credit facilities like those provided by Affirm is becoming more noticeable, especially during tough economic times. Tools like Affirm’s BNPL are facilitating spending in challenging economic conditions, making them essential for many consumers. Yet, as retail prices escalate, the long-term consequences of increased dependence on deferred payment plans remain to be fully understood.
