Affirm's Expanded Stripe Partnership to Boost In-Store BNPL

Affirm Holdings, Inc. AFRM has recently expanded its partnership with Stripe to become the first buy now, pay later (“BNPL”) provider to be directly integrated into Stripe Terminal, the point-of-sale (POS) system used by more than a million in-store locations across the United States and Canada. This means shoppers paying in physical stores through Stripe’s POS devices can now choose Affirm at checkout.

Customers can scan a QR code, complete a quick eligibility check, and select repayment terms ranging from one month to 60 months for purchases from $35 to $30,000, escaping any late or hidden fees.

This is important because physical stores still witness more than 80% of retail spending, even in a digital-first era. While BNPL’s biggest adoption has mostly been in online purchases, the latest deal will help AFRM penetrate in-person transactions. By embedding directly into Stripe’s POS system, Affirm gains instant access to Stripe’s large retail footprint in the two countries. For Stripe, adding Affirm makes its offerings more competitive to merchants seeking flexible payment options that can boost conversion rates and average order values.

The move will likely increase Affirm’s transaction volume and merchant adoption without heavy integration costs. Its total transactions surged 45.6% year over year to 31.3 million in the last reported quarter. Meanwhile, Stripe will likely benefit from higher merchant retention and potential increases in payment processing volume as customers opt for larger purchases financed over time. Also, both companies can tap into cross-selling opportunities.

How are Other BNPL Providers Faring?

AFRM’s peers like PayPal Holdings Inc. PYPL and Block, Inc. XYZ are increasing their BNPL footprints throughout North America and globally.

In the second quarter, PayPal’s total payment volume grew 6% to $443.5 billion. Its active accounts gained 2% during this time to 438 million. PayPal’s transaction revenues increased 4% year over year in the second quarter. Meanwhile, Block’s BNPL platform’s Gross Merchandise Value grew 17% year over year to $9.11 billion. During the quarter, Block witnessed its BNPL gross profit jump 22% to $268 million. Its post-purchase BNPL options will likely boost Cash App Card figures.

Affirm’s Price Performance, Valuation and Estimates

Shares of Affirm have gained 27.6% year to date, outperforming the broader industry and the S&P 500 Index.

Affirm’sYTD Price Performance

From a valuation standpoint, Affirm trades at a forward price-to-sales ratio of 6.23X, up from the industry average of 5.84. AFRM carries a Value Score of F.

The Zacks Consensus Estimate for Affirm’s fiscal 2025 earnings implies a 103% improvement year over year, followed by massive growth next year.

The stock currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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