Consumers flock to short-term financing


As of this writing, shares of Affirm are down about 15%. This is partly due to forecasts that gross cargo volumes will slow and the macroeconomic environment is uncertain.

The consumer, of course, is the glue that ties it all together. And on Friday morning, US Federal Reserve Chairman Jerome Powell warned that interest rates would continue to rise to fight inflation. It remains to be seen how this affects consumer spending, but this may be why buy now, pay later (BNPL) remains a key lure for individuals and families to buy what they need, with relatively low (or no) fees. with more traditional credit products.

The recent string of earnings results among BNPL’s reporting providers underscores the fact that BNPL is gaining a firm foothold around the world.


Sezzle said in its July update, released earlier this month, Underlying Merchant Sales (UMS) for July 2022 increased 9.5%, measured month-over-month at $141.2 million. The growth was driven by the Sezzle Premium subscription program, the company said, where there were 64,000 active subscribers in the first 75 days.

The company also said in its statement that it is preparing to launch a convenience fee for US consumers who prefer to use a debit or credit card for 2-4 installment payments through the main four-payment product.

“The fee will not apply to the first payment; consumers are still required to pay with a card. Additionally, consumers will have the option to pay via ACH for 2-4 installments at no additional cost,” Sezzle said, adding that “the company expects this initiative to motivate consumers to pay using ACH processing. at a lower cost, thus greatly improving the unit. economy.” This convenience fee will be rolled out in testing towards the end of the current quarter and will be launched in the fourth quarter.

In its second-quarter results, Sezzle said the number of active merchants grew 19% year-on-year to 48,000. Active users grew 18% to 3.4 million, while regular users accounted for more than 93% of these consumers.

To affirm

As reported in this space on Thursday, Affirm’s transactions per user increased 31%, compared to a growth rate of 8% a year ago, with the typical BNPL user completing three transactions in the fourth quarter, compared to two one year ago. And company filings show GMV in the fiscal fourth quarter soared 77% to $4.4 billion. Of the 12 million transactions recorded during the quarter, 10.1 million were repeat transactions, with the remainder being new customer transactions; 85% of customers were repeat customers. Active merchants gained 13% quarter-over-quarter growth to 234.8 million. Regarding credit quality, the allowance for losses as a percentage of loans held for investment was 6.2% in the last quarter, compared to 6.4% in the third quarter and rising. compared to 5.8% in the fourth quarter a year ago.

Block/After payment

In its own results, Block management said its BNPL platform, which we acquired through the Afterpay acquisition, generated $150 million in gross profit, split between Square and Cash App.

In the second quarter, GMV for Afterpay was $5.3 billion, up 13% year-over-year or 65% on a three-year CAGR basis. In a comment on the call, Chief Financial Officer Amrita Ahuja said the loss rate on Afterpay was 1%, which was a slight improvement from the first quarter.


In the second quarter, PayPal said in a commentary on its earnings call that it processed $4.9 billion in volume, up 226% year-over-year, with more than 22 million consumers using BNPL. CEO Dan Schulman said consumers have used the service more than 100 million times since its launch; more than 200,000 merchants offer this option.

Schulman said on the call that “we don’t charge any merchant fees. We do not charge late fees to consumers. We make our money not by buy now, pay later, but with the “halo” impact, which is around 21% when someone uses buy now, pay later. We are not dependent on these sources of income.

Separate it

Splitit’s latest quarterly update indicates that its sales volume of $94 million was up 4% year-over-year and its 1,300 active merchants year-over-year represented a 31% year-on-year increase. The average order value, the company said, was “well over $1,000.”


We do not yet have second quarter results for Klarna. But the first quarter results show that 150 million active consumers globally represented a 60% year-over-year jump, including 27 million in the United States, in turn up 65%. GMV for the quarter increased 19% year-on-year to $20 billion. Global trading partners grew 37% during the period to reach over 400,000. Up to 93% of transactions came from returning users.

The company said in its results that one million consumers are now using the interest-free Klarna “pay later” card for everyday purchases in Sweden, Germany and the UK, driving up purchase volumes by 78% year over year.


About: Results from PYMNTS’ new study, “The Super App Shift: How Consumers Want To Save, Shop And Spend In The Connected Economy,” a collaboration with PayPal, analyzed responses from 9,904 consumers in Australia, Germany, UK and USA. and showed strong demand for one super multi-functional app rather than using dozens of individual apps.

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