As consumers navigate a challenging economic environment, they are increasingly turning to buy now, pay later (BNPL) options to manage their spending.
Affirm, a leading BNPL provider, reported in its fourth quarter fiscal 2024 financial results on Wednesday (Aug. 28) that gross merchandise volume (GMV) increased 31% year over year to $7.2 billion and revenue rose 48% to $659 million. These increases underscore the growing appetite for flexible payment options as consumers grapple with financial pressures.
Looking ahead, the company’s CEO, Max Levchin, told analysts on a conference call to discuss these results that potential rate cuts could lead to an increase in usage.
“The most exciting thing about the reductions in this fund rate is that we’re just going to have more active users, … we’re going to have more returning users because we can approve more people,” Levchin said.
The PYMNTS Intelligence report “Redefining Retail: Consumer Finance Trends Driving the Evolution of Pay Later Plans,” based on a survey of more than 2,600 U.S. consumers, found that one in three consumers have used BNPL in the last year. That share rises to 39% among those who live paycheck to paycheck and have no trouble paying their bills, and 43% among those who do and have trouble paying their bills.
Additionally, the report found that 59% of consumers use payment plans to better manage their spending on expensive purchases such as home furnishings and appliances. Further research from PYMNTS Intelligence found that 63% of BNPL users cited cash flow management as an important reason for choosing this payment method.
In addition, BNPL users are increasing their frequency. According to the company’s shareholder letter, 40% of all Affirm transactions in fiscal 2024 came from consumers who transacted quarterly or more frequently, a significant increase from just 10% in fiscal 2021. Average transactions per active consumer reached 4.9 in Q4 2024.
This growth comes as consumers are very satisfied with their BNPL experience. The PYMNTS Intelligence report, “Divided, Not Conquered: Acquirer and Merchant Confusion Clouds Split-Payments Landscape,” found that 79% of BNPL users are very or extremely satisfied with the plans they use.
Now the company wants to more than double Affirm cardholder spending and increase card acceptance.
“Currently, our annual spend is about $3,000. The right number, in my view, would be at least $7,500 and about 20 million active cards. That’s the goal,” Levchin said. “When we’ll get there, I don’t know, but I think that’s both possible and necessary for us to be successful.”
Amid ongoing economic challenges, the use of BNPL services continues to rise, reflecting consumers’ desire for greater financial flexibility and control. The significant growth reported by Affirm and insights from PYMNTS Intelligence underscore the increasing reliance on BNPL as a tool to manage cash flow and more easily handle larger purchases.
With a significant portion of users expressing high levels of satisfaction with their experience, BNPL options have become an important part of modern consumer finance, providing a practical solution to meet the evolving needs of today’s shoppers.
