BNPL & My Reluctant Optimism

My sister, bless her, is a maximalist. Not in the charming, curated way you see on Instagram, but in the “collects porcelain cats and insists they’re an investment” way. She recently tried to explain “Buy Now, Pay Later” to me, and I mostly just nodded, picturing a mountain of tiny, chipped felines accruing interest. It’s exploded, this BNPL thing, hasn’t it? Seamless checkout, they call it. I call it enabling. Though, truthfully, I’m enabling my own coffee habit, so who am I to judge?

Apparently, 90 million Americans are using this stuff. Ninety million. That’s roughly the population of Germany, all collectively delaying the inevitable regret of a slightly-too-expensive sweater. The average spend is $244 a month. Which, if you extrapolate, is enough to fund a surprisingly robust porcelain cat collection. It’s a shift, though, away from credit cards. Younger folks, especially, seem to prefer this. Easier access, I suppose. Less paperwork. Fewer opportunities to feel vaguely ashamed of your spending habits.

I’ve been looking at Affirm (AFRM +4.16%). Not because I need to finance a new set of artisanal dog biscuits, but because the numbers are…intriguing. They’re essentially a bridge between paychecks. A very, very popular bridge. And I’m always looking for bridges. Solid ones, preferably, not the kind built on the shaky foundation of impulse purchases. They offer “Pay in 4,” these short-term loans, interest-free. It’s a clever trick, really. Like offering a free appetizer, knowing you’ll get them on the drinks. They make their money from merchants, a discount rate. It’s a symbiotic relationship. The retailer gets the sale, Affirm gets a cut, and I get a vague sense of unease.

They also offer longer-term loans, with actual interest. Up to 36%. Which, let’s be honest, is predatory. But then again, so is the entire concept of consumer debt. It’s just…nicely packaged. The difference with Affirm, though, is simple interest. Compound interest is the devil’s work. It’s like a hydra, constantly growing new heads of debt. Simple interest is…well, simple. Still debt, but less terrifying.

Their growth has been impressive. Gross Merchandise Volume jumped from $20.2 billion to $36.7 billion. A 38% increase. It’s like watching a particularly enthusiastic weed flourish in a carefully manicured garden. They’ve partnered with Amazon and Shopify. Smart. Get in bed with the giants. It’s the only way to survive in this ecosystem. Their partner volume is up 70%. Seventy percent. That’s a lot of porcelain cats, I suspect.

And then there’s Trump. His proposal to cap credit card interest rates at 10%. It’s a long shot, of course. Legislatively improbable, legally questionable. But if it did happen? It could be a boon for Affirm. Banks might pull back on lending to those with less-than-perfect credit. Leaving a void. A void that Affirm is perfectly positioned to fill. It’s a cynical thought, but I’ve learned to expect the unexpected in this market.

Regardless of what happens with the credit card rate cap, Affirm is doing something right. They’re growing, they’re cutting losses (down from $1.2 billion to $87 million last year), and they even posted a profitable quarter. A profitable quarter. In this climate? That’s practically a miracle. They’re projecting $47.5 billion in GMV by 2026, with 7.5% operating margins. It’s ambitious, but not entirely unrealistic.

So, am I optimistic about Affirm? Reluctantly, yes. It’s not a slam dunk. It’s a risky bet. But sometimes, the riskiest bets are the most rewarding. And besides, I’ve always had a soft spot for underdogs. Even if those underdogs are facilitating a national obsession with slightly-too-expensive sweaters.

2026-01-19 05:23

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