Affirm bulks up lending power ahead of earnings

• Key insights: Affirm partnered with Worldpay to boost its distribution; and with New York Life to sell its BNPL lending volume.

• What’s at stake: The BNPL fintech is battling rivals such as Klarna and PayPal for merchant and consumer support.

• Forward look: Affirm reports earnings Thursday.

As it battles buy now/pay later rivals like Klarna and PayPal, Affirm is adding merchant and financial scale to bolster its installment lending.

Affirm has signed a distribution deal with Worldpay, and expanded its relationship with New York Life to sell Affirm’s future lending volume to the insurance giant’s investment arm. The payments fintech is making these deals ahead of its upcoming earnings call on Thursday; while Worldpay, Affirm’s processing partner, awaits potential acquisition by Global Payments.

“Our strategy has always been to have our methods available in as many places as possible. We want to be where consumers make decisions about how to pay,” Wayne Pommen, Affirm’s chief revenue officer, told American Banker.

Affirm has expanded an existing partnership with Worldpay that will integrate Affirm into Worldpay’s embedded payments option for software sellers. The product, Worldpay for Platforms, supports embedded payments for more than 1,000 software-as-a-service companies that have processed more than $400 billion in payments volume and 4.6 billion transactions over the past 12 months. These SaaS firms will have the ability to offer Affirm as a payments option, including financing. Affirm’s financing options include rates starting at 0% annual percentage rate with plans ranging from 30 days to 60 months for purchases between $35 and $30,000.

“It’s mainstream payments that consumers are looking for,” Pommen said, noting Affirm has added 23 million users in the past 12 months and that these consumers make “multiple” payments per year via Affirm’s checkout option – including payments that don’t require installment financing.”It’s not just a certain retailer, or product they are looking to sell through buy now/pay later.”

Embedded payments refers to integrating checkout into a third-party app in an effort to ease payments by reducing navigation. By collaborating with Worldpay, Affirm can more easily embed its checkout – and BNPL option – into the software businesses that are part of Worldpay’s client roster.

“These platforms are becoming more important in the payments world,” Pommen said. “They’re serving businesses like gyms, medical offices, storage facilities, etc, and offering software that helps these firms manage those businesses. At the same time, there’s a trend toward offering payments as part of that mix, so it’s important for us to be part of that trend,” Pommen said.

In a separate deal, New York Life agreed to purchase up to $750 million of Affirm’s installment loans on a forward-flow basis between this week and December 2026. This will provide off-balance-sheet funding that can support up to $1.75 billion in consumer loan volume per year. New York Life has previously invested nearly $2 billion in Affirm’s collateral, including through Affirm’s asset-backed securities. “As we continue to deploy capital to create lasting value for our policy owners, Affirm has distinguished itself by delivering superior credit outcomes that generate attractive returns,” said Brendan Feeney, a managing director at New York Life, in a release.

Pommen did not comment on other Affirm partners, including if Global Payments, which is in the midst of acquiring Worldpay, is among those partners.

He also did not comment on Global Payments’ potential acquisition of Worldpay. “We don’t think [that deal] would change our partnerships. We look to work with multiple partners and scale is always important.”

Among other BNPL fintechs, PayPal recently entered a similar BNPL investment deal with New York-based alternative asset manager Blue Owl Capital, which will buy approximately $7 billion worth of PayPal Pay in 4 BNPL loans originated in the U.S. PayPal said the investment will enable it to expand its BNPL portfolio and invest in the product.

Pay in 4 was launched in 2020 and allows customers to break up purchases into four interest-free payments over six weeks. PayPal processed more than $33 billion in BNPL payment volume in 2024, an increase of 21% over 2023.

Klarna recently signed a distribution deal with JPMorganChase ahead of Klarna’s IPO.

“Affirm’s merchant and debit card programs continue to grow rapidly,” Tony DeSanctis, senior director of Cornerstone Advisors, told American Banker. “This is one more channel to expand adoption. I am not sure how many banks and credit unions will adopt the offering because of the economics but I think it is a low-risk and high upside opportunity for Affirm and others.”

In a research report on Affirm and Klarna, Morgan Stanley said, “there are a wide range of near-term outcomes for the BNPL group. Positively, the holiday period tends to be a period of incremental share gains / accelerating growth; Klarna is expanding its U.S. Fair Financing and Card products, and Affirm is leaning into its frequency and 0% APR promotions. On the other hand, investors have become increasingly concerned that credit performance is set to deteriorate and the health of the private credit-driven funding channel is deteriorating.”