Affirm, the prominent buy now, pay later provider, has unveiled plans to launch a spending account linked to its debit card, expanding its financial services suite. Affirm President Libor Michalek, during the company's recent investor forum in New York, shared that the account would offer features such as savings account-type interest, ATM access, and direct deposit capability. While a specific release date for the spending account was not disclosed, a spokesperson confirmed its general availability at a later date.
The move comes on the heels of Affirm's success with its debit card, boasting 500,000 active users and achieving $100 million in gross merchandise volume as of October this year. The company is strategically targeting the broader card market to further grow its user base.
Notably, the Affirm debit card enables users to make immediate payments or opt to pay over time using the company's app, capturing both immediate and deferred spending. With the introduction of the spending account, fintech aims to create a more integrated experience for cardholders, fostering tighter synergy between the card and associated financial services.
Furthermore, Affirm CEO Max Levchin highlighted key benefits, emphasizing that refunds deposited into an Affirm account become immediately available for spending again. Drawing on his experience from PayPal, Levchin noted the psychological impact of having an available balance, terming it a "force multiplier on transactional velocity." Additionally, maintaining a balance in the account serves as a valuable underwriting signal, particularly for lower-income consumers or those with lower credit quality.
While Affirm had quietly offered a savings account to understand consumer behaviors, the launch of the spending account represents a more intentional move into transactional banking. Levchin clarified that this development is not a foray into banking and emphasized that Affirm does not intend to lend from these deposits at present.
Addressing expansion plans, Affirm revealed a disciplined approach to entering new markets, with the U.K. identified as the next target outside the U.S. Pat Suh, Senior Vice President of Revenue at Affirm, expressed the company's intention to move beyond short-term, interest-free loans in the U.K. market, citing active conversations with potential partners and a strategic team in place.
On top of that, Affirm's foray into the business-to-business (B2B) sector was highlighted, with Best Buy announced as its second B2B partner following the inclusion of Amazon Business. These moves underscore the company’s commitment to diversifying its financial offerings and expanding its footprint in both consumer and business finance.