Affirm Holdings, Inc. AFRM

The business

Affirm sits at the checkout and offers to split the purchase. Sometimes that is four payments over six weeks at no interest, which the merchant pays for because it lifts conversion and basket size. Sometimes it is a twelve or thirty-six month loan at a real interest rate, which the consumer pays for. The Affirm Card extends the same mechanic to everyday spending, where the customer decides after the fact whether to pay now or split it.

The money comes from two places that behave nothing alike. Merchant fees are software economics, priced per transaction and settled immediately. Interest income is lending, which means holding the asset and wearing the losses. Affirm originates through bank partners and then funds the loans itself through warehouse lines, forward-flow sales to institutional buyers, and securitization. Whatever the labels say, this is a lender with a very good distribution channel.