From NBC Universal:

1. Americans shopping online after midnight are more likely to make risky transactions and default on their loans, according to Affirm CFO Michael Linford. The fintech firm uses the time of a consumer’s transaction, along with repayment history and data from Experian, to determine loan approvals. Late-night financial decisions pose increased risk, attributed to factors like inebriation and desperation for credit.

2. Fintech lenders like Affirm, Klarna, and Sezzle offer real-time approvals for buy now, pay later loans embedded in online retailers’ checkout pages. This approach allows them to assess customers and transactions on the spot, focusing on short-term repayment ability. While these loans offer upfront rates and lower fees than credit cards, they have drawn criticism for enabling overspending.

3. Affirm mitigates repayment risk by denying transactions or offering shorter-term loans with down payments. This strategy has kept 30-day delinquencies steady at 2.4%, despite a 32% surge in total purchase volumes. Unlike credit cards, Affirm has little incentive to accumulate user debts, as they don’t charge late fees or compound interest. This contrasts with the rising credit card delinquencies seen at major U.S. banks.

4. Credit card delinquencies have risen at major banks since 2021, as Americans now owe $1.13 trillion in credit card debt. Higher interest rates and persistent inflation have contributed to this $50 billion increase in debt. Affirm CFO Michael Linford attributes this to relaxed underwriting standards and aggressive lending in the face of consumer stress.



Read more: Affirm buy now pay later vendor discusses loans, delinquencies