We see shares rise 15% on Wednesday, after the retail chain Target began offering online lender installment loan services to customers for purchases over $100.
Target said in a blog post that consumers are preparing for the holiday shopping season and are partnering with Affirm and smaller rival Sizzle.
“We know guests want easy and affordable payment options that work within their family budget,” said Gemma Kubat, Target’s president of financial and retail services.
Buy Now and Pay Later (BNPL) services often result in no-interest installment loans, as retailers meet consumer demands for an easier way to pay off debt. Yes, the popularity is skyrocketing. BNPL providers typically add a checkout button to the retailer’s website to receive a deduction from the seller on a transaction-by-transaction basis.
RBC Capital Markets estimates that BNPL Options will increase retail conversion rates from 20% to 30% and increase the average ticket size by 30% to 50%.
Affirm went public in January for $49 per share, after which Wednesday’s share price jumped more than 150% to $127.80. The company’s market capitalization has grown to around $35 billion.
An Affirm spokesperson confirmed the Target transaction and emailed CNBC in a recent survey by the company that 69% of Americans are “interested in using a pay time solution this holiday season.” There is. “
Affirm’s most significant announcement came in late August, when Amazon announced it was offering the service for purchases of $50 and up on its site. Affirm’s stake increased to 47% as the company became Amazon’s first installment loan provider.
In early August, Affirm partnered with Apple to finance iPhones, iPads, and Macs.
The BNPL market is far ahead of Affirm. In August, Square agreed to buy Australian Afterpay for $29 billion. This is the biggest technical transaction of the year. And in June, Swedish fintech company Klarna raised $46 billion in funding after partnering with Macy’s in late 2020.
Target states in its post that customers can apply for confirmation to begin. Then, once the cart is filled on Target’s website, shoppers can choose to pay with Affirm and make a monthly repayment decision.
“Confirmation doesn’t charge late or hidden fees, so we won’t pay more than agreed upon at checkout,” Target said.
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