Affirm Holdings Inc. (AFRM) CEO Max Levchin announced a new no-fee lending model during a recent interview, emphasizing alignment with consumer interests. The move signals a strategic pivot in the buy-now-pay-later sector amid growing regulatory and market scrutiny.
- Affirm (AFRM) introduced a no-fee lending model for 30% of its transaction volume
- Fee elimination expected to reduce customer acquisition costs by up to 18%
- Projected 5% margin compression in Q2 2026, offset by 22% projected user engagement growth
- Stock rose 4.3% post-announcement amid positive market reaction
- Strategic shift responds to regulatory scrutiny and consumer trust concerns
- May prompt competitive re-evaluation among BNPL peers
Affirm CEO Max Levchin disclosed in a recent interview that the company is rolling out a no-fee lending model for select consumer transactions, marking a departure from its traditional fee-based structure. The initiative targets high-frequency shoppers at major retailers and aims to reduce friction in the payment process. This model eliminates upfront lender fees, though interest rates remain variable based on borrower creditworthiness. The shift follows a broader industry reassessment of BNPL pricing models, particularly after regulatory bodies and consumer advocates raised concerns about hidden costs and debt accumulation. Affirm’s new model applies to approximately 30% of its current transaction volume, with the company projecting a 12-month implementation window. Internal benchmarks suggest that customer acquisition costs could decline by up to 18% due to improved user retention and brand perception. The financial impact is expected to be moderate in the near term, with Affirm projecting a 5% reduction in gross profit margins for the fiscal quarter ending March 2026. However, management anticipates a 22% increase in active user engagement over the same period, potentially driving long-term revenue through higher transaction volume and cross-selling opportunities. The announcement triggered a 4.3% uptick in Affirm’s stock price the following trading day, reflecting investor optimism about sustainable growth and competitive differentiation. Analysts note that the move could pressure other BNPL providers, including Klarna and Afterpay, to reconsider their fee structures in response.