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Will Affirm replace the debit card? It's going to try

·Anchor, Editor-at-Large
·2 min read
In this article:
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Buy now, pay later platform Affirm is about to go toe-to-toe with a standard bearer in the payments space: the good old-fashioned debit card. 

The company told investors at an event this week it's moving closer to a broad rollout of its new debit card, which will allow for installment payments. 

"It's a card that works with your existing checking account. You don't have to switch your banking relationship. You get the new card from us, swipe it and use it the way you normally would. You get a notification if the transaction is splitable," explained Affirm founder and CEO Max Levchin on Yahoo Finance Live

Levchin — a co-founder of PayPal —said the waitlist for the product is close to 1 million. It will begin rolling out more broadly starting in 2022.

Suffice it to say, the Street is jazzed up by what the new debit card will mean to Affirm's top and bottom lines. 

"We see Debit+ as an avenue for Affirm to penetrate everyday, in-store spend," said Bank of America analyst Jason Kupferberg in a note to clients. 

For Affirm, it's just the latest in a series of wins — which include the teasing of a new crypto trading service this week — that have powered the stock higher by about 80% in the past three months

Shares of Affirm exploded more than 48% on Aug. 30 after unveiling a new partnership with Amazon. Under the deal, Affirm will help Amazon consumers finance large purchases.

Select Amazon customers will now have the option to split the total cost of purchases of $50 or more into monthly payments by using Affirm. Consumers will not be charged late fees, a hallmark of Affiirm's service.

Deutsche Bank analyst Bryan Keane says Affirm will see a material tailwind to its financials thanks to Amazon.

"Although it is difficult to forecast the exact impact of this partnership, our first back of the envelope CY22 estimate would be an annual total payment volume (TPV) contribution of ~$7.7 billion, with a potential revenue contribution of $385 million (potentially ~22% of Affirm) and incremental contribution profit of $74 million (potentially ~12% of Affirm)," Keane estimated. "Since Amazon will likely bring material volumes, Amazon likely attained attractive pricing especially given the competition for a deal of this size. However, we believe this deal is a positive for all buy now, pay later players given a solidification of the sector by Amazon and further advancement of industry adoption."

In early August, Affirm scored a financing deal with Apple for purchases of the tech giant's products in Canada. In July, Affirm landed a deal with Shopify to power financing options for the platform's U.S. merchants.

Brian Sozzi is an editor-at-large and anchor at Yahoo Finance. Follow Sozzi on Twitter @BrianSozzi and on LinkedIn.

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