As the buy now, pay later (BNPL) space heats up, one major player laid out why he thinks his company is a cut above the rest.
"Affirm is unique among the industry in the sense that we don't charge any fees, and that includes not charging late fees," Affirm CEO Max Levchin said on Yahoo Finance Live (video above). "The majority of the providers can't quite boast that level of consumer friendliness."
Other major BNPL providers like Australian firm Afterpay — recently acquired by Square (SQ) — and Swedish competitor Klarna both charge their users late fees. BofA analysts watching the space recently highlighted Affirm as a "clear" winner among peers based on metrics regarding user growth.
Giving 'consumers a sense of control' with BNPL
The BNPL space has heat up over the past few months, with established companies like Mastercard (MA) and Visa (V) also jumping into the BNPL space.
Traditional banks are also watching the sector closely: In an earnings call on Oct. 13, JPMorgan Chase CEO Jamie Dimon said the nation's largest bank "will spend whatever we have to spend to compete with all these folks in our space" given that Affirm (AFRM) announced its intention to offer debit cards and cash banking accounts.
Levchin, a former co-founder of PayPal, stressed how BNPL players like his company offered a mission-driven approach to the consumer lending process.
"Our mission is to bring transparency to the whole idea of buying [and] paying for things over time, and give consumers a sense of control," he said.
Affirm isn't the only one in the no late fee game: PayPal (PYPL) is also not charging customers late fees when they miss BNPL payments as of October this year.
"In most cases... roughly half of Affirm transactions have no consumer interest at all... [and the interest] is disclosed and does not change," Levchin said, "which fundamentally is about control and sense of security for the consumer."
The company also announced this week it has inked a deal with American Airlines that will allow consumers to pay for their travel in installments.
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Aarthi is a reporter for Yahoo Finance. She can be reached at [email protected]. Follow her on Twitter @aarthiswami.
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