What Is Affirm & How Does Buy Now, Pay Later Work?

Affirm is a popular payment method for shoppers that lets them spread their payments over time, rather than paying for their purchases upfront. It’s a type of payment known as buy now, pay later, and it can have a severe effect on your online store’s conversion rates and average order value.

We think Affirm is one of the best buy now pay later apps, but if you’re just starting to explore adding buy now, pay later (BNPL) options this complete Affirm guide will help you make your decisions.

What Is Affirm?

Affirm is a loan company offering “buy now, pay later” (BNPL) options, otherwise known as short-term consumer loans. By providing a short-term credit option, Affirm lets customers spread out payments in a way that suits their budget.

Affirm isn’t just good for consumers, though. BNPL statistics show that adding a payment option like Affirm can increase sales and build repeat business.

That’s especially true for two types of sellers: those selling big ticket items, with products priced over $500, and those who target younger consumers, who use BNPL increasingly for purchases under $100. And because short-term lenders like Affirm offer instant short-term loans with no hard credit check, BNPL is increasingly seen as a smart shopping strategy among those who don’t want to use credit cards.

Simply put, a short-term consumer loan option like Affirm can knock down price barriers and give customers another way to buy. Add it as an option on your checkout page, and you might entice shoppers to complete their purchases by offering a simple credit option that lets them buy now and pay later.

Is Affirm Safe?

Affirm is generally a safe BNPL option for both customers and merchants. However, buyers should be aware that, in general, BNPL options don’t offer the same protections as credit cards, such as zero-liability fraud protection. And some consumers complain that it can be hard to get a refund via Affirm if an item is returned after purchase.

Still, with 4,935 ratings on Trustpilot, Affirm has 76% five-star ratings and only 22% ratings of three stars or less. Most of the negative reviews concern returns and some misunderstandings about making payments.

The positive reviews agree that using Affirm as a BNPL option is quick and easy. The company has an A+ rating with the Better Business Bureau.

How Does Affirm Work?

Here’s an example to illustrate how Affirm works to help you increase order value and build repeat sales. Note that Affirm is available for online purchases and in person for most stores that already accept Visa cards.

Let’s say you can’t live a moment longer without a new gaming console, even though you don’t have a credit card or enough cash in your bank account to pay for it. Find a seller who offers Affirm as a payment option, and you can take out a short-term loan on the spot to finance part or all of your purchase.

You’re given the choice of several different term lengths, maxing out at 36 months to pay back the loan. Affirm then shows you how much money you will pay in interest, both as a percentage and a dollar amount. It also shows you what your monthly payment will be. If you accept, you’ll receive a digital payment card via the Affirm app, and your purchase can be processed without any money changing hands or additional fees for the buyer to worry about.

The loan’s APR will range between 0% and 36%. The rate at which an individual consumer is charged will depend on several factors, including the terms agreed upon between Affirm and the vendor, the term length chosen, and the consumer’s history (both credit history and buying history with Affirm). Affirm does not charge late fees. However, late payments and partial payments could hurt your credit score and limit your future Affirm financing options.

Applying for Affirm financing requires a shopper to provide their name, birthdate, phone number, and email address. A “soft” credit check is performed that does not affect the buyer’s credit rating. Affirm processes the data and approves or denies the financing almost immediately. Consumers who download the Affirm app can prequalify for purchases with Affirm before they begin shopping.

Shoppers who accept the loan terms will receive a virtual “credit card” in the app that allows them to input traditional credit card numbers at the point of purchase. The app is available for Android and iOS, and shoppers can use the app to track their loan repayment dates and to make payments securely. The apps are highly rated by users.

Who Can Offer Affirm Loans?

Affirm works with businesses of all sizes, across a range of industries. To be eligible, you must sell directly to US consumers and have a US bank account, a website in English, and prices in USD.

Affirm maintains a list of prohibited products and services. For example, Affirm will not work with companies selling stolen, counterfeit, or unauthorized goods; narcotics, controlled substances, or pseudo-medical products; and firearms, knives, explosives, or incendiaries. Additionally, Affirm declines to work with high-risk companies, explicit or sexually-oriented products, and crude or violent products or marketing.

If your business seems eligible, the next question is whether you should add Affirm.

So next, let’s take a look at the pros and cons of offering Affirm to your customers.

Benefits Of Adding Affirm As A Payment Option

The biggest benefit of adding Affirm as a payment option is that it makes it easier for customers to buy from you. That’s a very good thing. Consider these statistics, courtesy of Affirm itself:

The Downside of Adding Affirm As A Payment Option

So far, Affirm seems pretty great. Your customers love low-interest or interest-fee short-term consumer loans that boost their purchasing power. And sellers like the potential sales increases Affirm can bring.

Is there a downside to adding Affirm?

For the most part, Affirm’s drawbacks involve money. Here are a couple of financial factors to consider:

It’s important to note that merchants offering Affirm don’t pay integration fees, annual fees, or monthly fees.

How To Add Affirm As A Payment Option

If that all sounds good, and you’re ready to get started, you’ll need to complete an application with Affirm first. You’ll enter basic information, such as your name, phone number, email, and business name, as well as some specific information that includes your average order value, annual revenue, and eCommerce platform.

After entering that basic information, you’ll be prompted to enter more details, including:

• Incorporated Business Name
• Website URL
• Business Display Name
• Business Type
• Industry
• Sub-Industry
• Annual Volume
• Average Order Volume
• E-Commerce Platform
• Payment-To-Shipment Time
• EIN
• Business Owner Name, Birthdate, & SSN
• Registered Business Address
• State Of Incorporation
• Bank Account Number & Routing Number

Once you submit that information, Affirm promises a response within one to three business days.

Assuming your application is approved, you can add Affirm to your online store, on your mobile app, as a payment option for in-store purchases, and even for telesales. Detailed instructions are included on Affirm’s website for each option.

The website also has a help center, where you can look within categories for help on general topics, or you can type in your specific question. If you don’t see the self-help answers you need, you can access assistance through a chatbot. Customer support is available daily from 7 AM to 10 PM CT. A response is promised within 24-48 hours.

Affirm Alternatives

Interested in learning about other buy now pay later options? Here are some other top choices, along with our suggestions for the best business types for each.

• Klarna: Best for fashion and luxury purchases
• PayPal Pay In 4: Best for PayPal sellers
• AfterPay: Best for Square sellers
• Sezzle: Best for Gen Z eCommerce
• Sunbit: Best for auto repair shops
• Wisetack: Best for the service industry
• Splitit: Best for high-ticket items

The Bottom Line On Adding Affirm As A Payment Option

Short-term, instant loans like those offered by Affirm fit into a broader trend of alternative payment. Affirm loans are fast, easy, and increasingly popular. Above all, they provide options for borrowers who have difficulty accessing credit or who wish to avoid using credit cards.

Is it worth incorporating Affirm into your business? If you’re selling relatively expensive items, Affirm could have a positive effect on your sales. Even if your products are priced lower, adding Affirm allows buyers to access BNPL payment if they wish to do so, without much of a downside for you.

Of course, Affirm is far from the only company offering POS loans to consumers. If you’re already using Square, for example, take a look at Square Installments to see if that might be a better fit for your business. If you’re using another popular eCommerce platform, you might find a different BNPL option that works well with your online store.