Interview with Erika White, Affirm’s Head of Communications and Corporate Marketing
1st September, 2020
Retailers, fintech and payment specialists are digging deep to understand how each generation of consumers is going about personal finances and overall finance management at this juncture. This is being done in order to evaluate what can trigger a buy, the chosen payment method etc. for various product categories. And considering that the travel industry has been hit hard merchants from this sector too must look at how all of this can play a part in reviving the situation.
The surge in “Buy Now Pay Later” (BNPL) option for transactions has stood out in the recent past, and travel retailers have already responded by activating the same on their digital assets.
Fintech specialists are expanding their operations across the globe, they are coming up with new products, going deeper into the lives of shoppers plus there are indications of consolidation, too.
Ai’s Ritesh Gupta spoke to Erika White, Affirm’s Head of Communications and Corporate Marketing, about consumer spending during the pandemic, evaluating risk associated with installment payments etc.
Ai: Can you explain how the spending habit has evolved in the last year or so, more so during the pandemic?
Erika White: Consumers are increasingly looking for more flexible, transparent ways to pay that help them manage their finances. A recent study from Ascent found that over a third of U.S. consumers have used a buy now, pay later service like Affirm.
And, our recent report about back to school shopping trends showed that pay over time is growing in popularity among parents -- 78% of the parents aware of pay over time solutions used one to buy at-home school supplies in spring 2020.
Ai: How does paying via credit card equate with using a debit card or option of installments?
Erika White: Affirm is a more simple, transparent, and consumer-friendly alternative to credit cards. We provide consumers payment flexibility, without a risk of hidden fees, at the point of sale. Consumers can split the total cost of their purchase, selecting repayment terms such as 3, 6, or 12 months, with interest as low as 0% APR. And Affirm never charges deferred interest or late fees so the number a consumer agrees to upfront never changes.
Ai: The pandemic has witnessed people losing jobs. How are you evaluating risks associated with people failing to make payments over a period of time?
Erika White: Affirm supports consumers by lending fairly and responsibly. Affirm doesn’t extend loans that we don’t believe can and will be repaid. We're able to do this through our home-grown proprietary credit scoring system that subverts the FICO monopoly and takes a greater quality and quantity of information into account, such as transaction history and credit usage. We use machine learning to make smart, ongoing adjustments to our credit models that enable people to spend in a way that’s responsible and wise.
Ai: What trends in payments would you like to highlight?
Erika White: Millennial and Gen Z consumers, having experienced the 2008 financial crisis and seeing credit card debt at an all-time high, are wary of traditional banking services and are opting for flexible payment options. Having grown up with subscription models like Netflix and Rent the Runway, these generations often prefer predictable monthly payments over traditional lines of credit, which can include deferred interest and hidden fees.
Ai: The travel industry has been hit hard this year. How do you think airlines and travel brands can associate themselves with BNPL or personal finance specialists to propel their recovery plans?
Erika White: Affirm is a great way for merchants to accelerate growth. Offering Affirm at check out drives overall sales, increasing average order value by 85%. Trusted by 5.6 million customers, Affirm approves on average 20% more customers than its competitors and 67% of its loans are from repeat customers. We’ve helped over 6,000 businesses, including Delta Vacations, Expedia, and Priceline, increase overall sales, reach new customers, and drive customer loyalty.
Ai: Affirm indicated that consumers have been saving their money during the pandemic and travel is expected to benefit once the consumer is ready to spend the same saved amount. Do you think by being there on personal finance apps, travel merchants can capitalize on the same?
Erika White: According to a survey conducted by Affirm, 40% of people who cancelled a trip this year, opted to save the money for the same trip in the future.
We believe that just as consumers look for flexibility in making travel plans, they expect the same flexibility in how they pay for those plans. Merchants partnering with Affirm are giving travelers the option to book now and pay over time, while never paying more than what they see up front, so they can feel more confident about their purchase. And by partnering with Affirm, merchants can reach our rapidly growing network of millions of customers.
Ai: What are your expansion plans? Any specific ones for the travel sector?
Erika White: We’re focused on best serving our customers and merchants in the travel sector and beyond and will continue to explore expanding the number and variety of merchants we serve.
Explore payment-related trends at the upcoming Airline Travel Payment Summit - ATPS Virtual Conference 2020
Date: 20 - 22 Oct 2020