Affirm Brings Micro-Lending to Stores through Apple Pay

Affirm, a startup focused on micro-lending, has teamed up with Apple Pay to provide loans for in-store purchases. Instead of charging a purchase to their credit card, users can apply for an installment plan through Affirm and use Apple Pay to complete the transaction.

Affirm offers financing options for over 1,000 retailers. Instead of paying full price for a computer, smartphone or piece of furniture, applicants can get an installment plan for 3-12 months. The length of the loan is based on its value, with some merchants offering a 30-day loan program for purchases under $50. Affirm pays for the product upfront, and the user repays the loan based on the stated terms.

Affirm has a cost estimator on their website so users can approximate their monthly payments. Interest rates vary from 10% to 30% based on credit, but Affirm does not look specifically at a person’s credit score to determine approval. They view “a wide array of credit data and other information to gauge a customer’s risk of defaulting.”

The partnership with Apple Pay may be an attempt for Affirm to enter the credit card market, without the need for a physical credit card. The loans are restricted to one purchase, unlike a credit card that can be used for multiple transactions. Users can see a definitive payment structure for large purchases so they can justify the expense before checkout.

A study from Klarna earlier this week revealed that 82% of online merchants believe offering instant financing could increase their sales. Affirm makes it easy for merchants to provide these services to their customers, and consumers to get loans on the items they desire.

Founder of Affirm and co-founder of PayPal, Max Levchin, said, “I’m optimistic there will be a day when shoppers instinctively reach for their phone and the Affirm app, rather than their credit card.”