Bloomberg reports that Buy Now, Pay Later company Affirm has announced plans to roll out a debit card and a cryptocurrency trading feature. The move comes as Buy Now, Pay Later (BNPL) experiences unprecedented growth in popularity driven by a pandemic-induced surge in online shopping. The total BNPL transaction volume for 2020 was $39 billion, compared to just $3 billion in 2019. Affirm’s move is in line with the global trend of fintechs seeking to position themselves as a one-stop-shop for various financial transactions, best exemplified by China’s Alibaba and Russia’s Yandex. It is also part of the mass adoption of cryptocurrencies by longtime financial industry incumbents.
PayPal already allows its customers to buy and sell cryptocurrencies on its platform. Visa recently began accepting USD coin, a cryptocurrency that is pegged to the U.S Dollar. Mastercard plans to begin enabling cryptocurrency transactions. It also announced this week that it will roll out a Buy Now, Pay Later option, a clear attempt to win back market share from Affirm and other BNPL upstarts.
While this development is exciting for industry observers and cryptocurrency enthusiasts, it is likely to exacerbate the already heightened anxieties of financial regulators. Affirm’s expansion into the cryptocurrency space can expose it to potential risk, as cryptocurrencies are known for their price volatility. It may also heighten Affirm’s regulatory burden as officials from the U.S Securities and Exchange Commission and the Federal Reserve have already signaled that they are inclined to step up oversight of companies involved in crypto trading. This compounds on to Affirm’s already dubious risk profile as a lender that is not subject to the same stringent regulations as traditional lenders such as banks and other loan providers. More on this in the Bloomberg article.
Overview by Sam Klebanov, Research Analyst at Mercator Advisory Group
