[slow_donkey]

Wonder if I'm the only one surprised by their actual revenue model. I had always assumed they made money off loan interest from consumers which they do, but it turns out over half of their 2020 revenue came from merchant fees instead.

I just went through the Peloton flow to see for myself and indeed there's a 0% APR option for 3 years so it's clearly being paid for by Peloton.

It also explains to me why people might choose to use Affirm even if they could afford the upfront cost.

[jakemal]

I moved about 5 months ago and purchased a few thousand dollars worth of furniture. I could have paid cash but since it was 0% APR, I used Affirm and set the money aside in an investment account that has paid for ~20% of the total cost. Of course it could have gone the other way, but it was a risk I was willing to take.

It's a really great deal as a consumer.

[warent]

If you have the Affirm app on your phone it isn't too surprising! They have a full e-commerce platform setup with numerous brands. I've used Affirm for years to help build my credit with 0 APR and I'm a very happy customer. Excited about their future.

[cbhl]

I feel like the retailer side makes sense, even if you do 0% APR. The alternative to Affirm's merchant fee is a credit card merchant fee (say, 2.9%).

Affirm takes what would be a ~$600 or $2000 credit card transaction and turns it into a series of ACH payments. If (cost of ACH + cost of underwriting) < (cost of credit card merchant fee) then the merchant and affirm can split the difference.

[ec109685]

Doesn’t this break down once interest rates ride higher then credit card rake?