With Americans buckling under the weight of record debt, many shoppers are turning to buy now, pay later (BNPL) programs, and Affirm Holdings (AFRM) is cashing in big time.
BNPL allows customers to split purchases into equal installments, often starting directly at checkout. The model took off during the pandemic and has only accelerated since.
According to eMarketer data, BNPL transaction volumes are projected to reach a record $16.7 billion in 2025. That’s double the 2022 total and seven times higher than in 2020, when BNPL first gained traction.
“BNPL use is exploding as consumers are increasingly searching for ways to borrow for spending,” The Kobeissi Letter said. “Americans are piling on debt like never before.”
This is concerning:
undefined The Kobeissi Letter (@KobeissiLetter) July 27, 2025
Annual undefinedBuy Now, Pay Laterundefined (BNPL) transaction volume is expected to reach a record $116.7 billion in 2025.
That would be double the 2022 total and 7 times higher than in 2020.
BNPL use is exploding as consumers are increasingly searching for ways to borrow… pic.twitter.com/LHPLwhO9PG
While BNPL is often marketed as a financial inclusion tool for underserved borrowers, mounting evidence suggests many consumers are relying on it for everyday expenses.
Morgan Stanley researchers noted that “consumers are increasingly tapping BNPL loans for small purchases, which signals broader acceptance but also potential risks.”
Meanwhile, a recent survey found that 25% of BNPL users now use it for groceries, up from 14% the year prior. Even more concerning, 41% reported making at least one late payment last year.
Despite rising concerns about household financial stress, persistent inflation, and sluggish wage growth, BNPL companies are benefiting from the trend and look positioned for continued growth.
Affirm's resilient growth
As a leading BNPL provider, Affirm offers a close look at the sector’s momentum.
In its fiscal second quarter, the company reported earnings of $0.23 per share on revenue of $866 million, beating Wall Street expectations. Gross merchandise volume (GMV), a key metric of total transaction value, hit $10.1 billion, well above the $9.64 billion forecast.
In the third quarter, Affirm delivered another strong performance. Revenue of $783 million was in line with estimates, while GMV again topped forecasts at $8.6 billion.
Like much of the economy, Affirm’s growth slowed in early 2025 as trade tensions weighed on consumer sentiment. Even so, the company expects a rebound this quarter, projecting GMV between $9.4 billion and $9.7 billion.
Affirm’s stock is up 8% year-to-date and has surged 145% over the past 12 months, bringing its market cap to nearly $22 billion.
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