Buy-Now Pay Later: Affirm’s Business Model Teardown
Affirm’s revenue flow
Buy Now Pay Later
Buy-now pay later (BNPL), is fast gaining prominence in the world of Fintechs in the Middle East. We have seen startups like Tabby and Tamara making news for their funding rounds or their merchant tie-ups. It is a phenomenon that has been over eight years in the making in its new avatar (Klarna/ Affirm).
Historically, it has older roots; it originates from the Layaway /Khata concept popular in markets as diverse as the US & India. Retailers have always been extending credit to their top customers- BNPL is the digital version.
Ever wondered how the business model works? Thanks to the good folks at Affirm, we get a glimpse into the inner workings of Affirm’s business model (refer image for the steps):
Revenue flow
Step 1- Customer makes an online purchase.
Step 2- Affirm has an originating bank (in this case, the Cross River Bank of New Jersey) that deducts the merchant service fee and remits the rest to the merchant (example here $50)
To carry on reading this story, please go on to my blog>>https://www.renjitphilip.com/buy-now-pay-later-affirms-business-model-teardown
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