How Does Affirm Make Money?

Affirm was founded in 2012 by a former co-founder of PayPal, Max Levchin Customer Financing Options, at retailers that are integrated with Affirm credit services. Let’s learn about ‘How Does Affirm Make Money?’.

How Does Affirm Make Money?

How Does Affirm Make Money?

Affirm fintech startup, which is known to provide a point of sale (POS) loan and buy now pay later options to its customers for shopping online. As a e-commerce merchant it attracts merchants and customers by such services to make money. 

Point-of-sale (POS) loans and buy now pay later payment options have now become obvious choices for consumers to pay through during their online purchases. Affirm is one of the well-established companies in the sector and they also attract many merchants and consumers with their flexible payment options.

Affirm as a platform also has a very firm business model which allows them to grow rapidly over the years and in this article you are going to talk about Affirm’s business model and its analysis.

Working of Affirm

Affirm offers point-of-sale(POS) loans through a network of its merchants across the globe. When any customer checks out with Emergent they have the option of selecting Affirm as their payment option.

Affirm reviews the application of the customer and issues an APR dependent on the financial credit score of the customer and another financial spending. If his/her application gets approved then they get a loan amount of up to $ 17,500-time span of 3 to 36 months for the repayment.

Customers can also repay their loans in instalments directly to Affirm, with APRs ranging between 0 to 30 and depending wholly on the applicant’s financial status.

Affirm Confirms that online merchants who add affirm Is there a payment option that can experience up to an 80% Of increase in their annual sales and orders as well as a 10% increase in purchases from customer retention.

Money making model of Affirm

Affirm commonly makes money in two methods. In the first method, they charge the customer interest on the loans they provide to them. The second method charges your Merchant a processing fee for every transaction.

Treverevenue-making systems also have money-making options through interchange fees. There are someone-making models of affirm discussed:

Interest on loan

As we already mentioned, affirm charges Interest on the loans that they issue to their customers. They also do not impose any hidden charges on the clients.

The rate of interest depends on the financial credit of customers. Affirm also claims that they lend loans up to around $750 every year. People normally repay their loans within 9 months at an APR of 15%. 

To minimize the risk related to loans, Affirm takes into account over 80 factors that provide details about customers’ credit styles. They include:

  • Social media presence of the user
  • Timeline of their past payment
  • U.S. reported data on education, employment
  • What is the type of purchases a customer makes

In some cases, Affirm also provides financial services at 0% interest. At this rate the company doesn’t make any money on loans, they show through merchant fees which we are going to discuss next.

Merchant fees

Company charges transaction fees on every order which is going through their Merchant’s platform. The company does not officially disclose rates but according to sources, they will range between 2% to 3%.

The transaction fees are dependent upon their sales volume, purchasing price and the types of goods they sold. Partners like Apple on Amazon pay very low fees due to their brand image. Companies also pay to Affirm a good fee for handling operations related to payments and transactions as well as taking risks related to payment credits.

Affirm Claims that working together with their leads to an 80% hike in their total sales.

Interchangeable fees

Last year Affirm disclosed that they have multiple debit card transaction data issued in partnership with a service provider visa. The debit card as well as other related products such as shopping apps are part of their goal to become a complete financial app for users.

Through this system, Affirm does not only want to promote their customers to take loans but also wants to become a great part of their services. This will be advantageous for companies in the form that they have more data points about users they can collect in their database Which we can use to better analyze risk related to loans.

The other advantage is that it also opens up new Monetization options for the company. With the help of debit cards, which have more than 10 cr people, generate good revenue through interchange fees.

Loans sales

Affirm sells some of its loans to the company which are generated through third-party investors. The profit and loss of the company are based on the sale and the loans of individuals to this company.

 Till the end of last year, Affirm made up to $57.6 million through the sale of loans and up to 16% of their revenue. Up to the end of the financial year, the company will generate up to $89.9 million of revenue and it is one of the greater sources of income for Affirm.

What are the benefits of Affirm for customers?

  • Simple and fine: It is considered to be the most simple and easy method for any customer to go for a loan and transaction system. Over the years they had attained so much trust without hidden or additional charges.
  • Rich experience: With the help of their platform users already experience a very fine system that works in a few clicks.
  • Flexibility: consumers can also set their payment timings and this provides great flexibility for them.
  • Accurate pricing: The company also claims that they perform better than traditional models and this provides current pricing to the customer


Now We’ve learnt about ‘How Does Affirm Make Money?’, Since the establishment of Affirm, This company provides very good incentives to both Merchants and also to consumers. The services they provide to the customers help as an interchange point for merchants to deal daily without any credit and loans fear.

The Making model of this company also makes it a very reliant and customer-rich platform to act as a loan-providing company. The repayment options for this company also make it suitable to work along with the lower interest rates.

  • What percentage does Affirm take from customers?

They charge up to 0 to 30% of interest rate on customers’ loans depending on their credit and financial status. They calculate certain factors to calculate the interest rate.

  • Does using Affirm for loans affect our credit score?

Affirm provides different payment options to consumers. It is wholly based on their credit status which does not affect their financial goals.

  • Can I pay to affirm early?

Yes, there are options for consumers who can pay off their loans earlier without any prepayment charges or fees. 

How Does Affirm Make Money?

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