- Affirm, a point-of-sale micro-lender that enables consumers to make purchases with the flexibility to defer their payments over time, plans to go public with the help of Goldman Sachs, according to the Wall Street Journal.
- According to the WSJ report, Affirm's value could go as high as $ 10 billion.
- The possible initial public offering comes as a buy now, payment later sparked a wave in 2020, fueled by increasing demand for online shopping and consumers' caution to overwhelm their budgets during the coronavirus pandemic.
- You can find more stories on the Business Insider homepage.
Buy now, pay later had a moment in 2020 – and a top fintech company in this area is reportedly looking to go public with the help of Goldman Sachs.
The purchase now, later pay lender Affirm, which allows online shoppers to use microcredit to defer their payments for goods purchased online, is said to have an IPO in mind that could be worth up to $ 10 billion The Wall Street Journal first reported on Thursday.
Last year, Pitchbook valued Affirm at $ 2.9 billion.
Goldman Sachs should work with Affirm to prepare the listing, WSJ noted. Both Affirm and Goldman Sachs declined to comment on reporting to business insiders.
However, the potential IPO is not set in stone, WSJ said, noting that the preparatory work is still at an early stage and the company is not guaranteed to be able to cope with it.
Affirm has planted the flag in digital retail in the past few months. This trend has gained momentum as consumers cut their budgets and switched to online shopping during the coronavirus pandemic.
The digital lender is accepted by more than 6,000 retailers, Business Insider previously reported. Affirm was founded by Max Levchin in 2012 and announced this summer that it will be Shopify's exclusive partner who is now buying and paying for later transactions.
Read more: How PayPal is trying to boost its lending business by leaning on a purchase now and paying frenzied later
"Dozens of millions of US consumers will be affected, which is a huge leap for us if we are only visible," Levchin told Business Insider at the time of the announcement.
If Affirm does not choose to go public, another alternative that the company has at its disposal would be to sell to a special purpose acquisition company, WSJ said.
SPACs or so-called blank check companies collect money through an IPO and then merge with existing companies to bring them to the stock exchange.
There has been a surge of SPAC debuts in the past few weeks, and they have emerged as an option elsewhere as companies look for ways to access public markets. Uber announced a deal earlier this month to buy the food delivery company Postmates, but Postmates had also considered a traditional IPO and a possible SPAC deal.
Further information: UBS has started to draw its wealth management clients' attention to blank check companies as the bank tries to trigger an SPAC intoxication
Affirm says buying now and paying later can increase consumer spending – a boon for companies that accept payments with the product
A variety of retailers, including Walmart, Wayfair, Warby Parker, and even travel websites like Expedia and Travelocity, have now taken over the purchase and will later pay microcredit that Affirm offers its customers.
It's a simple premise: if consumers can delay full payment for items, they're more likely to spend more at the time of purchase, Affirm and its competitors say.
According to Affirm, average acquisition costs can rise by more than 85%.
The fintech niche "buy now, pay later" rode a wave in 2020.
Read More: Fintech Klarna, supported by Snoop Dogg, takes a page from Amex & # 39; Spielbuch and launches a loyalty program to eliminate its competitors who buy now and pay later
Afterpay, an Australia-based microcredit company that operates similarly to Affirm, saw tremendous growth in the first half of 2020, expanding its customer base by 443% year over year, Business Insider reported in May.
And PayPal, the giant in digital payments, has also taken steps to expand its deferred payment options. A new product was launched in France last month that allows customers to split the cost of their purchases into four installments spread over three months.
"With COVID and what's going on, credit can play a very important and critical role for us," Doug Band, senior vice president and general manager for global lending at PayPal, told Business Insider.
The band said Millennials and Gen Z buyers are among the most enthusiastic users of the purchase, so they'll pay off later.
"We definitely focus on that," he said, "to give these consumers flexibility in different financing options."
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