Buy Now, Pay Later Sees Record Demand During Cyber Week\n\nConsumers are embracing the convenience and flexibility of buy now, pay later (BNPL) options, with record demand seen during Cyber Week. According to Adobe Analytics data on e-commerce, shoppers spent $940 million using BNPL, a 42.5% increase from last year. This payment solution, which allows for payments to be split into equal installments, has become popular for both discretionary and essential purchases, from apparel and furniture to gas and groceries.\n\nThe global market for BNPL is projected to continue growing, with a forecasted increase from $309.2 billion in 2023 to $565.8 billion in 2026, according to GlobalData. This trend is reflected in the performance of BNPL provider Affirm (AFRM), whose shares have risen 70% in the past month and 375% on the year. This is a significant turnaround for the payments industry, which faced challenges in 2022 due to the fading fintech boom and issues such as spending pullback and consumer delinquencies.\n\nWhile BNPL plans typically do not charge interest for pay-in-four options, longer-term financing can have APRs of up to 36%. There are various ways for firms to generate revenue besides interest on loans. For example, Affirm earns a cut of transactions from merchants for facilitating sales, issues a debit card that earns interchange fees, and sells a portion of its loans to third-party investors.\n\nAccording to Mizuho analyst Dan Dolev, BNPL will only be one component of Affirm’s business in the future. The company’s CFO, Michael Linford, highlighted the safety and transparency of BNPL loans compared to credit cards, which are designed to keep consumers in debt for extended periods. Affirm underwrites loans by assessing each borrower’s financial health, making it a less risky option for consumers.\n\nIn the BNPL market, Affirm is leading the pack, with the most noticeable uptick in usage compared to competitors like Square’s Afterpay. In fiscal Q4, Affirm had 16.9 million active customers, with 91% of transactions from repeat customers. The company’s revenue has tripled since fiscal year 2020, reaching over $1.5 billion. Similarly, Afterpay saw a 19% increase in transactions during Black Friday through Cyber Monday weekend.\n\nThe growing demand for BNPL options, particularly during Cyber Week, highlights the convenience and appeal of this payment solution for consumers.