Affirm is ‘bringing consumers their spending power back’ amid economic ‘turbulence’: CEO
Affirm co-founder and CEO Max Levchin says consumers need more access to credit during inflation, Fed’s rate hikes
Affirm co-founder and CEO Max Levchin argues people need more access to credit in an inflationary environment.
After experiencing a business boom during the pandemic, the "buy now, pay later" pioneer Affirm is expecting consumer demand for their services to grow even while facing decades-high inflation and the Federal Reserve’s aggressive rate hikes.
"As rates go up and prices go up, people need more access to credit," Affirm co-founder and CEO Max Levchin told FOX Business’ Maria Bartiromo Tuesday. "They're literally losing their purchasing power, and we're here to give it back to them."
On "Mornings with Maria," Levchin admitted that while the Fed’s attempt to get inflation under control could impact the business, Affirm doesn’t predict a deteriorating credit situation.
"There's more demand for this product as rates go up, and we look that much better than credit cards, because, of course, that also goes right to the consumer's wallet," Levchin said.
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The technology company offers services permitting shoppers to purchase items now, but pay only a fraction of the cost with an accompanying installment plan. Affirm works with more than 60% of e-commerce brands in the U.S.
Affirm CEO Max Levchin says the buy now, pay later platform is giving "consumers their spending power back" amid inflation and the Fed's rate hikes, on "Mornings with Maria" Tuesday, October 4, 2022. (Getty Images)
Levchin claimed "deep, diverse relationships" with investors and funding partners will help the company’s success moving forward in economic "turbulence."
"We feel very good about our ability to weather whatever new rate hikes that come our way," Levchin said. "But of course, over time, all of these things filter through."
It’s "still fairly early" to tell whether consumers’ ability to pay their bills will be impacted by further rate hikes and rising commodity prices.
"We have seen very slight deterioration in consumer credit at the lower tiers, folks that traditionally have a hard time keeping their jobs," Levchin explained. "But these are small ripples, if you will, and at the macro level, I'm a big believer in the American economy. I think we'll do fine."
The "buy now, pay later" service isn’t just a pandemic "phenomenon," according to the co-founder and CEO, who noted the company saw 500% growth in general merchandise year-over-year.
"I believe it fundamentally represents a change in consumer behavior," Levchin said. "Folks are realizing that revolving, perhaps in perpetuity, on their credit cards is not nearly as good as having control and clarity over their personal financial decisions."
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Affirm co-founder and CEO Max Levchin believes the U.S. consumer is still ‘quite healthy,’ and the company’s outlook is ‘relatively strong.’
With plans to expand into Canada and the U.K., Affirm's CEO says the company’s Q4 outlook is looking "relatively strong."
"We just have a lot of work to do and frankly, look forward to bringing consumers their spending power back," Levchin pointed out. "And I think that's what we have to be doing in this period of inflation."