Affirm Holdings, Inc. (NASDAQ:AFRM) has recently entered into a strategic collaboration with the well-known digital gift card distributor, Blackhawk Network (BHN), aiming to introduce a range of transparent and flexible payment options for purchasing gift cards. This move underscores Affirm’s commitment to providing consumers with convenient financing solutions in the digital gift card space.
Seamless Financing Process
Consumers interested in buying digital gift cards can take advantage of Affirm’s user-friendly financing process. By applying for a loan on the Affirm platform, consumers receive immediate approval. Subsequently, they can select from a variety of tailored repayment plans, featuring annual percentage rates (APR) starting at 0% for eligible purchases. The 0% APR
loan option eliminates interest payments for consumers, making it an enticing proposition.
Transparent Purchase Experience
Affirm ensures that consumers have a clear understanding of their total purchase cost. Even if consumers miss payments or are late, they won’t be required to pay additional fees at the time of checkout. This transparency provides consumers with peace of mind as they explore and purchase digital gift cards from diverse categories, including entertainment, dining, clothing, accessories, outdoor goods, and home, directly through Affirm’s official website or its app.
Strategic Partnership and Market Entry
The collaboration with Blackhawk Network opens doors for Affirm’s payment solutions in the rapidly growing market of digital gift cards. This market’s growth rate is reported to be more than double that of physical gift cards, as highlighted by BHN management. With Blackhawk Network witnessing over 300 million daily shoppers globally, this partnership is poised to significantly boost Affirm’s network reach.
Revenue Boost and Merchant Collaboration
Affirm’s foray into the digital gift card market presents an opportunity to increase merchant fees in exchange for driving higher sales through financing products. Affirm typically earns substantial merchant fees on 0% APR financing products. The flexibility offered by Affirm’s financing product suite, allowing consumers to buy now and make installment payments later, contributes to its widespread adoption.
Strategic Timing and Holiday Season Impact
The decision to expand financing options into the gift card market aligns strategically with the ongoing holiday season. Affirm’s recent survey indicates that 70% of Americans may opt to purchase a gift card during this festive season. With reports of Black Friday sales reaching a record $9.8 billion, including $79 million in online sales facilitated by buy-now-pay-later (BNPL) options, the move is well-timed and positioned to capitalize on the holiday shopping surge.
Recent Successes and Growth
Affirm’s recent achievements include being selected by Amazon (AMZN) as the first pay-over-time option for its business-to-business store, Amazon Business, in November. Additionally, a partnership formed with Booking.com in September 2023 to provide flexible payment options for consumers in travel bookings further underscores Affirm’s momentum.
The positive market response is evident in Affirm’s stock surge of 67.3% over the past three months, significantly outperforming the industry’s 2.2% growth. Affirm currently holds a Zacks Rank #2 (Buy), solidifying its position as a promising player in the evolving landscape of digital payments and financing solutions.
Featured Image: Megapixl
