Affirm Holdings is a financial technology (FinTech) company famous for lending money to support installment loans that let consumers pay at the point of sale.
The company, headquartered in San Francisco, United States, was founded in 2012 by Max Levchin, Nathan Gettings, Jeffrey Kaditz, and Alex Rampell.
Affirm was founded as a part of HVF, a startup studio. As a fintech company, Affirm mainly focuses on lending money. It functions as a third party in purchase transactions, paying sellers in full and letting customers clear the debt in installments.
Customers may choose to complete the payment within 3 to 12 months. In return, they would have to pay interest aside from the product’s principal amount. Apart from interest fees, Affirm also earns revenue through percentage fees from merchants.
One of the things that customers like about Affirm is that the service encourages responsible spending. They don’t charge late fees and will only decrease your credit score if you’re past the due date.
With good standing, Affirm will also let you get loans without needing a down payment. Depending on several factors, interest rates in Affirm range from 0 to 30 percent.
In case you're curious: this is how Affirm makes money.
One of its co-founders, Max Levchin, is also among the founders of Affirm’s competitor, Paypal. Levchin founded Affirm to create a platform focused on lending money at the point of sale rather than simply being a payment tool. The company was originally known as Expedite before switching to its current name the following year.
The company filed for an IPO in 2020 but postponed it a month after. Nevertheless, it has finally opened its IPO and raised almost $1.2 billion. You’ll find Affirm on NASDAQ, bearing the ticker symbol AFRM.
Affirm partners with other famous e-commerce startups like BigCommerce, Shopify, and Zen-Cart. Affirm is Amazon’s official partner that caters to their “buy now, pay later” feature in the US. This contract will go on until January 2023. Walmart, a well-known US-based multinational corporation, is also among its partners.
With the founders’ experience in FinTech, it wasn’t long before Affirm became famous in its field. As of March 2022, the company reported over 2,000 employees. Meanwhile, their merchant network now comprises more than 168,000 members.
In the same year, Affirm reported over 11.2 million active users, which is 7.1 million more than in 2021. Their total revenue for the fiscal year 2021 reached around $870.5 million but with a net loss of $430.9 million.
The methodology by which competitors of Affirm are ranked is based on various data points. Information such as the revenue generated, the number of merchant partners, the number of employees, the number of available countries, the gross domestic value, the number of users, the total funding raised, and anything else that’s relevant is being taken into account.
This analysis, to ensure comparability, only looks at the digital lending (buy now, pay later) competitors of Affirm. Other fintech competitions aren’t considered, especially platforms that don’t involve lending and installment loans. Apart from that, lending apps that do not require the purchase of a product or service are not included.
On the other hand, companies that Affirm (partially) owns or is related to are considered. For instance, Max Levchin, Affirm founder and CEO, owns around a $34 million stake in Paypal. Still, the two companies continue to compete against each other. Moreover, despite the fact that Affirm only operates in the United States, it also owns PayBright, a Canadian fintech company that competes with other Buy Now, Pay Later (BNPL) players in Canada.
Also keep in mind that this analysis excludes Affirm’s indirect competitors. Examples would be traditional banks, online banks, on-site lending institutions, credit cards, savings accounts, etc.
So, without further ado, let’s take a closer look at the top 7 competitors of Affirm.
1. Klarna
Headquarters: Stockholm, Sweden Founder(s): Sebastian Siemiatkowski, Niklas Adalberth, Victor Jacobsson Year Founded: 2005
Klarna is a Swedish-based fintech company operating in multiple territories worldwide. Aside from BNPL and post-purchase payments, Klarna is also famous for other online financial services such as peer-to-peer (P2P) payments, requesting money, sending funds, and debit.
Klarna started as an entry in an annual competition at the Stockholm School of Economics, in which the founders did not end up in good standing. However, the trio continued to come to business the same year. After securing investment and partnership with two capitalists and programmers, the founders finally released Klarna as a startup.
As with Affirm, Klarna offers users various payment options and methods. But unlike Affirm, which lets users choose within 3–12 months, Klarna users may opt to pay the loan in full after 14 to 30 days of the transaction. Customers here are allowed to complete payments after three years, too.
The interest rates in Klarna may be slightly lower than Affirm’s, which is only around 19% per annum. But unlike Affirm, Klarna doesn’t offer 0 interest to rewarded users or merchants. There are also some reports where Klarna refused to process payments. There may also be issues in completing big-time transactions. Despite their claims of a no-hidden fee system, there are still reports of confusion and a lack of clarity.
Aside from offering great deals to customers, Klarna also aims to appeal to merchants. With that, the platform is marketed as an opportunity to increase sales. As with many companies in the BNPL industry, Klarna shoulders all the risks in each loan, so merchants do not need to worry about the “payment later” system.
Starting as a giant-in-the-making in Europe, Klarna has managed to penetrate the US market, writing its name among the top fintech companies in the country in 2020. As of 2021, the service is available in 45 countries and has over 400,000 retail partners worldwide. As of 2021, Klarna has more than 147 million users, 20 million of which are in the United States.
With that, it’s daily easy for Klarna to secure investments now. The firm has raised $4.5 billion in funding thus far. As of 2021, its total revenue reached $1.6 billion. Klarna reportedly houses over 4,000 employees, mostly based in Sweden and Berlin, Germany. The same year, Klarna also reported over $80 billion in completed transactions.
Sources: Crunchbase, Klarna Annual Report, Klarna Full Year Results, Sifted, Whiteboard
2. Afterpay
Headquarters: Melbourne, Australia Founder(s): Nick Molnar, Anthony Eisen Year Founded: 2014
Afterpay Limited is an Australian-based fintech company that mainly focuses on BNPL. Afterpay is available in Australia, New Zealand, Canada, the United States, and the United Kingdom.
After establishing a merger with Tourchcorp, a payment processing company, Afterpay Touch Group was formed in 2017 and was renamed Afterpay Limited in late 2019. Unlike its other competitors. Afterpay charges an additional fee for late payments.
Two years after its humble beginnings, Afterpay filed its IPO in 2016 in Australia, with a value of $25 million. In 2018, the company had its breakthrough, raising over AUD 300 million. The company gained over 2 million active users and more than 7,000 partner merchants in the same year. It has then acquired a partnership with Visa Inc., helping them penetrate the US market.
The same year, Afterpay bought 90% of Clearpay, a UK-based company that works in the same industry. The acquisition helped Afterpay gain more than 200,000 users in the United Kingdom in its first two weeks.
Upon entering the COViD-19 Pandemic, Afterpay grew dramatically between 2019 and 2020. With several physical stores closing and numerous consumers clinging to online shopping, Afterpay has opened conversations with many investors who see the largest potential for e-commerce and fintech industries.
In 2020, the company acquired the Singaporean tech company, EmpatKali, which operates in Indonesia. Aside from the Southeast Asian companies, Afterpay will also penetrate various markets in Canada, Spain, Italy, and France. Germany and Portugal are also possible (though unconfirmed) target countries.
Afterpay was acquired by Square (now Block Inc.), another fintech company, for US$29 billion in August 2021. Its founders still led Afterpay’s merchant and consumer ventures after the acquisition.
In the fiscal year 2021, Afterpay reportedly completed over AU$19.7 billion in transactions, mainly through its BNPL and Cash App services. As of 2021, Afterpay raised over $375 million in investments. Reportedly, their latest revenue reached AU$924.7 million in 2021.
Afterpay has almost 10 million users worldwide, with around 20,500 new users daily. In the first half of 2022, their partner merchants reportedly reached more than 55,000 across the globe. Their employees are estimated to be about 650 people in over 40 countries.
Sources: Afterpay Annual Report, Fashion United, Financial Review, PYMNTS, Tech in Asia, The Guardian, The Sydney Morning Herald
3. Sezzle
Headquarters: Minneapolis, Minnesota, USA Founder(s): Charlie Youakim, Paul Paradis, Killian Brackey Year Founded: 2016
Sezzle is a BNPL fintech company that serves the US and Canada. Unlike the previous companies on the list, Sezzle offers an interest-free installment plan to its customers, provided that they buy at the selected partner stores.
As with Affirm, the founder of Sezzle also had previous experience working for a payment solutions company. Charlie Youakim, its current CEO, led Passport Parking, a payment service provider focusing on transportation and parking services.
Before Sezzle’s IPO, the company had only raised $17 million in capital. With the IPO in 2019, Sezzle raised over $30 million. Initially, the service was focused on ACH payments and has marketed itself with cash-back rewards. It was in 2017 when Sezzle switched to the BNPL industry, following its growing success in the US.
In 2019, Sezzle released a digital card processing feature to keep up with the competition. It simultaneously secured a partnership with the Bank of America Merchant Services. That same year, Sezzle expanded operations in Canada. The platform reached 1 million active users in early 2020 as a result of all of those initiatives.
In mid-2020, Sezzle became the first BNPL company to become a public benefit corporation after raising enough funds. Soon after that, the company announced plans to expand services to India. Sezzle began operating in Brazil following that.
In 2021, the company generated revenues of $99 million and had raised over $118 million in funds. By the end of that year, Sezzle reported over $1.8 billion worth of completed transactions.
Sezzle is available in the USA, Germany, France, Austria, Canada, Belgium, the UK, Spain, the Netherlands, and Italy. According to the latest reports, the platform has almost 8 million users, 3.4 million of which are active debtors. In addition, the company houses around 540 employees. In 2021, Sezzle partnered with nearly 47,000 merchants.
Sources: Cision, Platform Executive, Penn Live, PYMNTS, Sezzle Basics, Sezzle Brazil, Sezzle Investors
4. Zip
Headquarters: Sydney, Australia Founder(s): Larry Diamond, Peter Gray Year Founded: 2013
Zip Co Limited is an Australian-based company that provides fintech services focusing on BNPL. Aside from its Australian market, Zip is also among the leading BNPL services in Canada, the USA, South Africa, some parts of Asia, and some European countries.
Initially, the platform was branded ZipMoney upon its foundation in 2013. Aside from its credit solutions, the company also launched everyday purchase services through ZipPay. In its first three years, the company has launched its IPO, partnerships, and acquisitions of various companies.
One of Zip’s key partners is Pocketbook, an Australian budget planner and personal finance platform in which Zip has acquired a $7.5 million stake. However, early in 2022, Zip announced it would shut down its Pocketbook app due to a lack of engagement.
ZipMoney Limited was renamed Zip Co Limited late in 2017. Although Zip has been around for a while, it was only in mid-2018 when its app was made available in the Apple Store and Google Play.
Aside from its early acquisitions, Zip also gained ownership over PartPay, another fintech company in the UK and New Zealand. The said venture yielded to further expansion. A year later, Zip also acquired ownership of SpotCap, a Berlin-based digital lending company.
In 2019, Zip also bought complete control of its New York competitor, QuadPay, for around USD 296 million. Zip had mostly been operating in the United States under its QuadPay brand. However, the two firms officially merged in July 2021 after which Zip solely operated under its own brand name in the country.
The company also acquired a 90% stake in Twisto, a Czech company, and a 25% stake in the African-based Payflex. Zip has secured its position in the Middle East by fully acquiring the BNPL service Spotii.
According to its 2021 Annual Report, Zip earned over AUD 397.5 million in revenue. The estimated value of transactions completed during the same period was almost AUD 5.8 billion. Currently, the company has a market cap of USD 2.91 billion.
In 2021, Zip reported almost 10 million active users, 5.7 million from the United States. As of 2021, Zip reportedly has nearly 82,000 partner merchants across its market countries. Currently, the Zip app is available in Australia, Canada, Czech Republic, India, Mexico, New Zealand, Philippines, Poland, Saudi Arabia, South Africa, UAE, UK, and the USA.
Sources: CB Insights, FinTech Futures, Hot Copper, MarketScreener, Moneymag, Wamda, Zip
5. PayPal’s ‘Pay in 4’
Headquarters: San Jose, California, USA Founder(s): Max Levchin, Peter Thiel, Luke Nosek, Ken Howery, Yu Pan Year Founded: 1998
Paypal Holdings Inc. is a publicly traded fintech company more famously known for its money transfer and cashless payments services. Initially, the firm was branded Confinity and offered a digital security service until it was rebranded as Paypal and transformed into an e-payment company in 1999.
It was in 2002 when Paypal went public. Not long after, eBay acquired the company for $1.5 billion. The acquisition helped make Paypal—or even digital payment—famous, as it was established as the primary payment method on eBay and other e-commerce platforms. In 2015, Paypal became an independent company again, following eBay’s spin-out.
In August 2020, Paypal released its BNPL service called “Pay in 4”. This feature allows customers to purchase products from $199 to $ 10,000. As the name suggests, this will be paid in four installments over 6 to 24 months. Paypal’s Pay in 4 offers a zero interest rate for bi-weekly payments. They also don’t charge additional fees for late payments.
As with other BNPL companies, Paypal allows users to make payments through debit cards or bank accounts. However, it requires customers to make a downpayment worth 25% of the purchase price. The remaining three installments will then be cleared every two weeks.
Aside from bi-weekly payment, Paypal also recently released Pay Monthly, which lets users pay every four instead of two weeks. Aside from the interest it carries, Paypal ensures no additional Pay Monthly costs.
In 2021, Paypal reported having completed $1.25 trillion worth of GMV. It’s estimated that around 70% of Paypal’s BNPL customers use Paypal as their digital wallet. In 2021, Paypal bought Paidy, a Japanese fintech company, for $2.7 billion. Following the acquisition, Paypal recorded a one-time increase of 3.2 million accounts.
Paypal’s BNPL completed transactions with over 1.2 million merchants. As of the first quarter of 2022, around 18 million users have availed themselves of Paypal’s BNPL service. Paypal recorded around 30,900 employees in 2021.
Although Paypal doesn’t disclose its revenues from each sub-categorized service, it has recorded a total of $25.4 billion in revenue in the fiscal year 2021, indicating an 18% growth from the previous year. Paypal’s BNPL service is only available in the US, UK, France, Germany, Spain, Italy, and Australia.
Sources: Forbes, Insider Intelligence, LinkedIn, Paypal Annual Report, Paypal BNPL, Paypal Newsroom, PYMNTS, Reuters, The NY Times
6. Splitit
Headquarters: New York, USA Founder(s): Gil Don, Alon Feit Year Founded: 2012
Splitit Business Payments is another fintech company based in New York, mainly focusing on BNPL services. The company was first listed publicly in 2019. Splitit allows users to decide on the period of installment. Depending on how long they clear credit, Splitit may offer debtors no interest.
What sets Splitit apart is that it’s interest-free and doesn’t conduct a credit check. It’s also famous for building bridges between manufacturers, retailers, and suppliers. The platform lets both parties decide how long the credit should be.
As we all know, B2B has been taking a slow pace in digitizing its transactions. Meanwhile, Splitit claims to be a gamechanger for business-to-business payments. Still, Splitit has much to improve with its slow and inconvenient process.
Splitit is a card-based platform, meaning payments are made through the user’s linked credit card. But unlike the direct use of credit cards, Splitit offers an advantage through its installment payment plans. Splitit then deducts the first payment from your card upon the order completion or delivery, and the rest will be deducted monthly.
The company reported a merchant sales volume of $396 million in 2021. In the same fiscal year, the reported revenue reached $10.5 million. The latest reports show Splitit has raised more than $264 million in funding.
Splitit’s company size is assumed to be around 51-200 employees. The company’s customer base jumped to 432,000 in 2021 from 119,000 in 2019, with over 1,000 merchants joining the platform.
Sources: Business Insider, Crunchbase, Digital Transactions, LinkedIn, Splitit, Splitit Annual Report
7. Apple Pay Later
Headquarters: Cupertino, California, USA Founder(s): Steve Jobs, Steve Wozniak, Ronald Wayne Year Founded: 1976
Apple Inc. is a well-known computer company that started as an electronics and software company in the late 70s. The tech giant has branched out into every conceivable technology industry sector ever since.
Throughout the decades, Apple has produced many iconic software and tech products, including the iPod, iPad, iPhone, iMac, iCloud, iMusic, and more. Since the summer of 2022, there’s a new product in town: Apple Pay Later.
With the BNPL industry’s increasing potential, it’s imperative for the electronic giant to penetrate the field. The company isn’t new to fintech as it’s been running Apple Pay, a payment mode offered to Apple users, since 2015.
Apple announced the release of the “buy now, pay later” feature alongside the iOS 16 release in June 2022. Unlike most BNPL companies, the payment period offered by Apple will only be up to 6 months, divided into four installments. Apple Pay Later will be operated under Apple Financing, an Apple subsidiary. Reports say that the credit limit under Pay Later will be around $1,000.
As of December 2021, there are around 507 million users of Apple Pay, which is a very sizeable chunk for Apple to tap into. Reportedly, Apple will offer 0% interest, with no additional fees, although late payment fees aren’t still confirmed.
Apple Pay is accepted by about 66% of merchants in the countries it serves. In addition, the platform is also a known partner to Mastercard, Visa, Discover, and American Express. So although Apple hasn’t yet confirmed a list of participating merchants, it’s expected that Pay Later will be available in Apple Pay’s partner merchants.
Pay Later will be available within Apple Pay, so the latter is more likely to be supported in the 74 countries where Apple Pay is available. Apple Pay has an indirect GMV of $800 billion as of April 2022. Earlier this year, Apple also bought the UK fintech startup Credit Kudos for $150 million, which serves as the initial capitalization for its BNPL product launch.
Sources: Apple Support, iMore, Protocol, Statista
