Latest news with #BNPL
Time Magazine
10 hours ago
- Business
- Time Magazine
New Development Could Improve Small Business Owners' Credit
This article is published by a partner of TIME. By Levi King I've spent my life in the trenches of American small business—fixing signs in the Idaho cold, sweating payroll in manufacturing, and later, building fintech platforms to help entrepreneurs like me navigate the labyrinth of credit. So when I read the news that FICO is launching credit scores that finally incorporate Buy Now, Pay Later (BNPL) data, I felt a jolt of hope and a twinge of caution. This is a watershed moment for credit history in America, and it's going to ripple through every Main Street and startup hub in the country. What This Means for Small Business Owners' Personal Credit Let me break down what this means specifically for small business owners, why it matters for your personal credit, and what you should take away from this announcement. For years, BNPL has been the wild child of consumer finance—ubiquitous, easy to use, but invisible to the credit bureaus. That's always struck me as a disconnect, especially for small business owners who often rely on every available tool to manage cash flow. Millions of entrepreneurs have used BNPL to bridge gaps, buy inventory, or simply keep the lights on. Yet, until now, their responsible use (or misuse) of these products didn't show up on their personal credit reports. FICO's move to include BNPL data in their new Score 10 BNPL and Score 10 T BNPL models is a long-overdue correction. As someone who's seen firsthand how invisible credit behaviors can torpedo a business loan application, I can't overstate how important this is for small business owners' personal credit. Lenders will finally get a more complete, nuanced picture of your financial life—not just the traditional credit cards and loans, but also the BNPL plans you may rely on to run your business. One of my lifelong missions has been to expand access to capital for the underdog—the entrepreneur with grit but no generational wealth, the immigrant starting a food truck, the single mom launching an Etsy shop. Historically, if your first credit experience was with BNPL, you were invisible to lenders. Now, FICO's new models promise to help small business owners build a legitimate personal credit history from day one. This is more than a technical tweak; it's a step toward leveling the playing field. If you pay your BNPL bills on time, that positive behavior will finally count for something. For small business owners who bootstrap with every tool available, this could be the difference between a 'yes' and a 'no' from the bank. One of the biggest risks with adding BNPL to credit scores was always the potential for unfair penalties. If each BNPL plan was treated as a separate loan, someone using BNPL for multiple purchases could look overleveraged—even if they were managing it responsibly. FICO's solution? Aggregate the loans, so the model sees the big picture, not just the raw number of accounts. That's smart. It means the system recognizes patterns and context, not just raw data. I've seen too many business owners get dinged for technicalities or misunderstood behaviors. This approach is a win for fairness and accuracy, especially for entrepreneurs juggling multiple short-term obligations. There's always anxiety when a new scoring model rolls out. But FICO's research shows that for more than 85% of BNPL users, the impact on their credit score will be about 10 points—and for most, it will be positive or neutral. That's huge. It means responsible BNPL use can actually help your personal credit, not hurt it. For small business owners who rely on every point to qualify for loans or better rates, this matters. Of course, missed payments will hurt you. That's always been true, and it's a necessary guardrail. But the days of being penalized just for using BNPL are over. I've been on both sides of the lending desk. When lenders can't see the full scope of a borrower's obligations, they either overreact (decline or price too high) or underreact (approve risky loans). Both outcomes are bad for small businesses. Now, with BNPL data in the mix, lenders can make smarter, more informed decisions. That means more approvals for deserving borrowers and fewer surprises down the road. For business owners, this also means you can finally see how all your credit behaviors—traditional and BNPL—affect your personal score. Transparency is power. This change is a wake-up call for everyone, especially small business owners who often mix personal and business finances (sometimes out of necessity; sometimes out of confusion). If you use BNPL, those habits are now part of your personal credit story. It's time to get educated: understand your payment schedules, avoid overextending, and monitor your credit reports like a hawk. Knowledge is your first line of defense. If you're not sure how BNPL is showing up on your credit, ask. If you're using it to manage cash flow, make sure you're not setting yourself up for a surprise down the road. Here's the bottom line: this is an opportunity. If you're a small business owner who uses BNPL to buy inventory, manage expenses, or smooth out cash flow, you can now build personal credit with those transactions—if you do it wisely. Pay on time, don't overextend, and keep records. This could help you qualify for better financing, lower rates, and more favorable terms. But beware: BNPL is not free money. Overspending or missing payments will hurt your score and your business. The same discipline you bring to your business books, you should bring to your BNPL accounts. A Call for Business Credit Bureaus to Step Up I started my first business in a world where credit was a black box. I learned the hard way that what you don't know can kill your dreams. FICO's inclusion of BNPL data is a long-awaited leap toward a more accurate, inclusive, and transparent credit system, especially for small business owners' personal credit. But let's not stop here. I hope the business credit bureaus are paying attention and will follow FICO's lead by updating their scoring models to include SMB BNPL data as well. Small business owners deserve the same recognition for responsible borrowing on their business credit profiles as they are starting to get on their personal credit reports. This is how we build a stronger, fairer financial future for Main Street—together. About the Author: Levi King is CEO, co-founder, and chairman of A lifelong entrepreneur and small business advocate, Levi has dedicated over ten years of his professional career to increasing business credit transparency for small businesses. After starting and selling several successful companies, he founded Nav both to help small business owners build their credit health and to provide them with powerful tools to make their financing dreams a reality.
Globe and Mail
20 hours ago
- Business
- Globe and Mail
Can Xsolla Help Affirm Gain an Edge in Gaming Payments?
Affirm Holdings, Inc. AFRM, the leading buy now, pay later (BNPL) solution provider, has entered a new partnership with Xsolla, a prominent gaming company, renowned for driving innovation and shaping the future of video game commerce. This deal unlocks access to Affirm's transparent and flexible payment solutions for game developers, using Xsolla's platform in the United States. With Affirm built directly into the checkout experience, players can divide their purchases ($50 or more) into biweekly payments at no interest or choose extended monthly plans based on their needs. This gives gamers the freedom to access premium content more affordably. Whether purchasing full games or in-game content, players can choose Affirm at checkout, complete a brief eligibility check, and, once approved, select a customized payment plan. They plan to expand in Canada and the U.K. soon. Teaming up with Xsolla will help AFRM to expand its footprint in the growing gaming industry, targeting a tech-savvy audience that prefers convenient and adaptable payment options. By embedding its flexible payment solutions into Xsolla's platform, Affirm can boost transaction volumes through frequent in-game and full-game purchases, while also diversifying beyond its traditional retail and travel partners. This partnership is likely to strengthen Affirm's financial position by unlocking new revenue streams. With players making regular purchases, Affirm can benefit from increased transaction volume, driving up gross merchandise value. By joining Xsolla's large network of game developers and publishers, Affirm can reach more merchants and enhance its brand visibility, which will help it to stay competitive in the growing digital market. How PayPal and Block Expanding in the BNPL Space? PayPal Holdings, Inc. PYPL is a major name in the BNPL space. It recently partnered with Selfbook to streamline hotel payments. The integration offers travelers a seamless way to pay using PayPal while unlocking special rates, making bookings more affordable. This move adds value for users and boosts booking performance for hotels, helping PayPal strengthen its position. Meanwhile, Block, Inc. XYZ is keeping pace in the industry by integrating Afterpay directly into its Cash App debit card, allowing eligible users to split qualifying purchases into biweekly instalments. This move helps Block expand BNPL access into everyday spending, embedding flexible payments right at the point of sale. Affirm's Price Performance, Valuation and Estimates Over the past year, AFRM shares have gained 9.8% underperforming the industry and outperforming the Zacks S&P 500 Composite. From a valuation standpoint, Affirm trades at a forward price-to-sales ratio of 5.49, down from the industry average. AFRM carries a Value Score of F. Image Source: Zacks Investment Research The Zacks Consensus Estimate for Affirm's fiscal 2025 earnings implies a 101.8% improvement year over year, followed by massive growth next year. The stock currently carries a Zacks Rank #3 (Hold).You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here. Zacks' Research Chief Picks Stock Most Likely to "At Least Double" Our experts have revealed their Top 5 recommendations with money-doubling potential – and Director of Research Sheraz Mian believes one is superior to the others. Of course, all our picks aren't winners but this one could far surpass earlier recommendations like Hims & Hers Health, which shot up +209%. See Our Top Stock to Double (Plus 4 Runners Up) >> Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report PayPal Holdings, Inc. (PYPL): Free Stock Analysis Report Affirm Holdings, Inc. (AFRM): Free Stock Analysis Report Block, Inc. (XYZ): Free Stock Analysis Report
Globe and Mail
a day ago
- Business
- Globe and Mail
Looking for Fintech Growth? Here's How Affirm and SoFi Stack Up
Affirm Holdings, Inc. AFRM and SoFi Technologies, Inc. SOFI are two standout names in the fast-evolving fintech sector. Both cater to Gen Z and millennial consumers, as well as older consumers, through technology-driven financial solutions that blend lending, digital banking and personal finance. While Affirm primarily focuses on point-of-sale financing through its buy now, pay later ('BNPL') model, SoFi operates a broader platform, encompassing lending, investing, banking and tech infrastructure. With digital financial services becoming more competitive and investors seeking scalable profitability, it is the perfect time to examine these two disruptive players side by side. Let us take a closer look at their fundamentals, execution strategies, and market positioning to see which one currently holds stronger growth potential. The Case for Affirm Affirm is witnessing rapid growth. In its third-quarter fiscal 2025 results, the company posted $783.1 million in revenues, up 36% year over year, and recorded an adjusted EPS of a penny, beating the Zacks Consensus Estimate by a wide margin. Affirm had long operated at a loss, but since the second quarter of fiscal 2025, it has demonstrated that scale and disciplined growth can translate into bottom-line results. Management also raised full-year guidance; revenues are now anticipated to be in the range of $3.163-$3.193 billion, higher than the prior outlook of $3.13-$3.19 billion. Affirm's success is rooted in its expanding merchant partnerships, ranging from Shopify and Apple Pay to Amazon and FIS, and its growing international presence, including Canada, the U.K. and Western Europe. The company's technology platform, which seamlessly integrates into e-commerce checkouts, is helping Affirm capture greater market share in the increasingly competitive BNPL space. Its adjusted operating margin for fiscal 2025 is expected to be 23-23.6%. Affirm's focus on unit economics, expanding partnerships, and disciplined cost structure makes it an increasingly attractive fintech growth story. The company is delivering on what investors want to see in 2025: profitable growth. Affirm is increasingly leveraging AI to boost employee productivity, including the use of a large language model-powered chatbot that manages a high volume of daily customer interactions with speed and accuracy. The company also plans to launch advanced tools aimed at helping merchants optimize customer acquisition, creating value on both sides of the transaction. With a strong track record in risk management, Affirm continues to expand its long-term funding relationships to support rising loan originations. It has already completed 24 asset-backed securitizations totaling $12.25 billion, backed by more than 150 diverse capital partners, underscoring the depth and resilience of its funding network. The Case for SoFi SoFi Technologies, too, has had an impressive run. In first-quarter 2025, it delivered record revenue of $770.7 million, growing 33% from a year ago, with net income jumping more than 200% to $71.5 million. Membership growth remains strong, with the platform adding more than 800,000 new users in the quarter, bringing the total to a whopping 10.9 million. SoFi's multi-pronged model, which spans banking, lending, investing, and even fintech infrastructure (through Galileo), has created a diversified business capable of capturing value across multiple verticals. In addition, SoFi's adjusted EBITDA rose to $210.3 million in the first quarter, reflecting a healthy 27% margin, and the company raised guidance for the full year. Its expanding suite of products and cross-selling ability positions SoFi as a well-rounded player in the digital finance space. However, the company's broad scope also introduces greater complexity. Executing across so many business lines simultaneously requires exceptional coordination. SoFi's heavy reliance on unsecured personal loans, which make up nearly 70% of its lending portfolio, raises concerns about the sustainability of its growth in the face of potential economic stress. This concentration exposes the company to elevated credit risk, especially given that the borrower-level delinquency rate for unsecured personal loans was 3.49% in the first quarter of 2025, per reports. SoFi's liquidity appears strained, with $27.9 billion in current liabilities, just $2.7 billion in cash as of March 31, 2025, and a current ratio of 0.8, which is below the industry average. This suggests limited flexibility to meet near-term obligations. In contrast, Affirm's robust current ratio of 11.5 highlights significantly stronger short-term financial health. How Do Zacks Estimates Compare for AFRM & SOFI? Zacks estimates show Affirm on a sharp upward trajectory. The Zacks Consensus Estimate for AFRM's fiscal 2025 sales and EPS implies a year-over-year improvement of 37% and 101.8%, respectively. The EPS estimates have been trending northward over the past 60 days. (See the Zacks Earnings Calendar to stay ahead of market-making news.) Image Source: Zacks Investment Research In contrast, SoFi is also expected to grow earnings, but the momentum is with AFRM. The consensus estimate for SoFi's 2025 sales and EPS implies a year-over-year rise of 26.2% and 80%, respectively. The EPS estimates have been trending northward over the past 60 days. Image Source: Zacks Investment Research Price Performance Comparison Over the year-to-date period, AFRM shares gained 9.8% while SOFI witnessed an 8.9% growth. During this time, the S&P 500 Index grew 2.9%. Affirm also shows stronger short-term momentum, with a 1-month gain of 32% compared to SoFi's 25.9%. Overall, Affirm's superior performance so far this year, driven by better earnings visibility and market sentiment, gives it a modest edge over SoFi. Price Performance – AFRM, SOFI & S&P 500 Valuation: AFRM vs. SOFI AFRM is currently trading at 5.49X forward 12-month P/S, higher than SOFI's 5.15X. Although SoFi appears cheaper, it is important to consider context: Affirm is rapidly scaling and has entered profitability, giving investors confidence in its underlying economics and growth potential. SoFi, by comparison, has a broader but more complex business model, one that the market is valuing relatively conservatively, perhaps reflecting its operational diversification and execution risks. Last Words Both Affirm and SoFi are standout fintech innovators with strong growth narratives, but Affirm currently has more room to run. It is 18.9% below its 52-week high of $82.53, while SOFI is 9% away from its 52-week high of $18.42. AFRM has demonstrated a decisive pivot to profitability, posted robust revenue growth, and continues to expand its merchant ecosystem with disciplined execution. Its AI integration, risk-managed lending and deep capital partner network support its long-term scalability. In contrast, SoFi's broad platform comes with greater complexity and credit concentration risk, especially in unsecured personal loans. Liquidity pressures and a lower current ratio add further caution. With stronger earnings momentum, better short-term liquidity, and a focused business model gaining traction, Affirm stands out as the fintech stock with more attractive upside potential, even though the companies currently carry a Zacks Rank #3 (Hold) each. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here. Zacks' Research Chief Picks Stock Most Likely to "At Least Double" Our experts have revealed their Top 5 recommendations with money-doubling potential – and Director of Research Sheraz Mian believes one is superior to the others. Of course, all our picks aren't winners but this one could far surpass earlier recommendations like Hims & Hers Health, which shot up +209%. See Our Top Stock to Double (Plus 4 Runners Up) >> Affirm Holdings, Inc. (AFRM): Free Stock Analysis Report
Yahoo
a day ago
- Business
- Yahoo
Buy Now, Pay Later loans popular among Gen Z, Millennials will soon affect credit scores
FICO announced it will begin factoring in Buy Now, Pay Later loans into people's credit scores starting in the fall of 2025. Credit scores affect Americans' ability to get a loan, buy a car or home, rent an apartment, and more. FICO, the data analytics company whose credit models are used in the majority of lending decisions, said scores accounting for BNPL loans will give lenders a more comprehensive view of consumers' repayment behaviors. In a joint study simulating the inclusion of BNPL data with Affirm, FICO found score impacts were generally consistent with the opening of a new account, meaning scores improved or decreased by about 10 points for the majority of consumers. FICO offers several scoring models. NerdWallet spokesperson Sara Rathner said lenders adopting new scoring takes time and most consumers likely won't notice the change this fall. 'Different scoring models are designed for different focuses,' Rathner said. "It could be years before these are largely adopted in decision making and they might not be adopted by lenders for all types of borrowing. ' Still, FICO said the introduction of this new kind of scoring represents a significant shift, as lenders catch up with consumers' growing reliance on BNPL loans. More: What is the average credit score and how is it measured? Expert tips on how to raise yours Younger generations appear to be digital BNPL loans' most common adopters. Apps like Klarna, Affirm, and Afterpay have made securing the loans easy. In many cases, it can be done on a mobile device, often without a hard credit check, and consumers can take on many loans at once. Use of these loans among Gen Z and Millennials seems to have accelerated over the last year, with about 10% of each cohort taking advantage of them, a new Bank of America report found. This comes following a three-year period of slowing use after digital BNPL platforms saw a rise in popularity. 'For some people it's because it's convenient, but there are some who are reaching for it because they've perhaps been a bit financially stressed,' said David Tinsley, senior economist at the Bank of America Institute. For those responsibly using BNPL loans to delay payments for big purchases like a home appliance, computer, or wedding dress, the FICO change could actually improve their credit score. Rathner said credit institutions had already found ways to factor in missed or late payments into people's scores, but this change could give people more recognition for their habits of paying off loans on time. 'We're certainly seeing this acknowledgement that there are lots of different ways consumers are financially responsible,' she said. 'So it is absolutely beneficial to consumers to factor that type of behavior into decision making when evaluating them for a loan.' Tinsley said while some gravitate toward BNPL loans as a way to spread out payments knowing they'll have the cash to make them, some low-income consumers with higher rates of delinquency also use them. Of course, for consumers taking on several BNPL loans at once and not paying them off, FICO's new scoring model could be another way for lenders to clearly identify that behavior. Rathner advises consumers to read the fine print before agreeing to a BNPL loan and ensure they know how much they will need to pay at what time. 'Keep that in mind with all of your other financial obligations, especially if you're using Buy Now, Pay Later frequently and you have multiple plans going on all at once,' she said. Tinsley said consumers should remember that BNPL loans usually put them on a stricter repayment schedule than credit cards. So, while they may have an initial zero-interest grace period, they will usually also have less flexibility. If people can't make the payments on time, they can be hit with late fees and interst rates equal to or greater than those they would have faced if they made the purchase with a credit card. 'Buy now pay later can be an incredible tool,' Rathner said, if you 'enter in knowing you have the money to pay it off.' If consumers are concerned about how BNPL loans are affecting their credit score, Rathner encourages them to check their score online. Checking your own score won't make it drop. Make sure it's accurate, Rathner says. If you see an account listed you don't remember opening, that could be a sign of fraud or an error. Report it to the credit bureau and the financial institution. If you apply for a loan and are denied or unhappy with the terms offered, don't be afraid to speak up. 'Speak to the lender about the factors that went into their decision and they can help you understand whether or not there are actions you can take that would improve your odds later,' she said. If consumers believe a lender's decision was unfair and based on inaccurate information, they can file a complaint with the Consumer Financial Protection Bureau. Reach Rachel Barber at rbarber@ and follow her on X @rachelbarber_ This article originally appeared on USA TODAY: Buy now, Pay Later loans will soon affect FICO scores
USA Today
a day ago
- Business
- USA Today
Buy Now, Pay Later loans popular among Gen Z, Millennials will soon affect credit scores
FICO announced it will begin factoring in Buy Now, Pay Later loans into people's credit scores starting in the fall of 2025. Credit scores affect Americans' ability to get a loan, buy a car or home, rent an apartment, and more. FICO, the data analytics company whose credit models are used in the majority of lending decisions, said scores accounting for BNPL loans will give lenders a more comprehensive view of consumers' repayment behaviors. In a joint study simulating the inclusion of BNPL data with Affirm, FICO found score impacts were generally consistent with the opening of a new account, meaning scores improved or decreased by about 10 points for the majority of consumers. FICO offers several scoring models. NerdWallet spokesperson Sara Rathner said lenders adopting new scoring takes time and most consumers likely won't notice the change this fall. 'Different scoring models are designed for different focuses,' Rathner said. "It could be years before these are largely adopted in decision making and they might not be adopted by lenders for all types of borrowing. ' Still, FICO said the introduction of this new kind of scoring represents a significant shift, as lenders catch up with consumers' growing reliance on BNPL loans. More: What is the average credit score and how is it measured? Expert tips on how to raise yours FICO responds to BNPL's growing popularity Younger generations appear to be digital BNPL loans' most common adopters. Apps like Klarna, Affirm, and Afterpay have made securing the loans easy. In many cases, it can be done on a mobile device, often without a hard credit check, and consumers can take on many loans at once. Use of these loans among Gen Z and Millennials seems to have accelerated over the last year, with about 10% of each cohort taking advantage of them, a new Bank of America report found. This comes following a three-year period of slowing use after digital BNPL platforms saw a rise in popularity. 'For some people it's because it's convenient, but there are some who are reaching for it because they've perhaps been a bit financially stressed,' said David Tinsley, senior economist at the Bank of America Institute. Who the change helps and hurts For those responsibly using BNPL loans to delay payments for big purchases like a home appliance, computer, or wedding dress, the FICO change could actually improve their credit score. Rathner said credit institutions had already found ways to factor in missed or late payments into people's scores, but this change could give people more recognition for their habits of paying off loans on time. 'We're certainly seeing this acknowledgement that there are lots of different ways consumers are financially responsible,' she said. 'So it is absolutely beneficial to consumers to factor that type of behavior into decision making when evaluating them for a loan.' Tinsley said while some gravitate toward BNPL loans as a way to spread out payments knowing they'll have the cash to make them, some low-income consumers with higher rates of delinquency also use them. Of course, for consumers taking on several BNPL loans at once and not paying them off, FICO's new scoring model could be another way for lenders to clearly identify that behavior. What to keep in mind if using BNPL loans Rathner advises consumers to read the fine print before agreeing to a BNPL loan and ensure they know how much they will need to pay at what time. 'Keep that in mind with all of your other financial obligations, especially if you're using Buy Now, Pay Later frequently and you have multiple plans going on all at once,' she said. Tinsley said consumers should remember that BNPL loans usually put them on a stricter repayment schedule than credit cards. So, while they may have an initial zero-interest grace period, they will usually also have less flexibility. If people can't make the payments on time, they can be hit with late fees and interst rates equal to or greater than those they would have faced if they made the purchase with a credit card. 'Buy now pay later can be an incredible tool,' Rathner said, if you 'enter in knowing you have the money to pay it off.' How will BNPL affect my credit score? If consumers are concerned about how BNPL loans are affecting their credit score, Rathner encourages them to check their score online. Checking your own score won't make it drop. Make sure it's accurate, Rathner says. If you see an account listed you don't remember opening, that could be a sign of fraud or an error. Report it to the credit bureau and the financial institution. If you apply for a loan and are denied or unhappy with the terms offered, don't be afraid to speak up. 'Speak to the lender about the factors that went into their decision and they can help you understand whether or not there are actions you can take that would improve your odds later,' she said. If consumers believe a lender's decision was unfair and based on inaccurate information, they can file a complaint with the Consumer Financial Protection Bureau. Reach Rachel Barber at rbarber@ and follow her on X @rachelbarber_
