FinTech: Buy-Now-Pay-Later Lender Affirm Raises $500M
The fintech’s products are alternatives to credit cards.
Affirm announced Thursday its raise of $500 million in a G Round led by GIC and Durable Capital Partners LP. Other investors included Lightspeed Venture Partners, Wellington Management Company, Baillie Gifford, Spark Capital, Founders Fund, and Fidelity Management & Research Company LLC. (Finextra.com)
The company, which CEO Max Levchin founded in 2012, has now raised an aggregate of $ 1.3 billion. It positions itself as a credit card killer, saying that late fees, compounding interest, and penalties push credit card holders into unhealthy debt.
Instead, shoppers can choose Affirm and pay for their purchases in monthly installments over six, 12, or 18 months, at an applicable interest rate.
Affirm doesn’t charge late fees or penalties of any kind.
Biweekly payment product for smaller ticket purchases
Affirm simultaneously announced its new, interest-free biweekly payment product for transactions as low as $ 50. For this offering, shoppers can check their eligibility in seconds without having to input their Social Security number or affecting their credit score in any way.
“Alongside this new capital, our latest product is another step towards becoming as ubiquitous as credit cards – Affirm is now an even more attractive payment option for everyday wants and needs,” Levchin added. “We can also now better support merchants who offer smaller ticket items and bring their customers a more transparent, flexible way to pay.”
In July, Affirm introduced its “Shop Pay Instalments” BNPL offering in the U.S. through a tie-up with Shopify (NYSE: SHOP).
During the COVID 19 epidemic, Affirm reported a 40% increase in merchant signings from March 1 to April 30, compared to the first two months of the year.
Buy now pay later products have been proving immensely popular due to the difficult economic conditions triggered by the pandemic. This has combined with a huge acceleration in online spending.
The conditions are tailor-made for fintech companies such as Affirm, given that credit card limits are often maxed out in these difficult times of furloughs, layoffs, and unemployment.
Related Story: Affirm and Shopify Tie Up To Offer Shopping on Installments
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