BNPL Lenders Look to Finance Travel Spending
As COVID restrictions continue to ease and more consumers return to traveling, Buy Now/Pay Later (BNPL) lenders are eager to expand from financing purchases of goods to providing financing for travelers—a purchase category that has historically been hugely important for credit card issuers.
BNPL lender Affirm recently partnered with American Airlines to expand its list of travel partnerships that support its BNPL product. The partnership is Affirm’s first BNPL collaboration with a major airline and shares of Affirm’s stock jumped 4.7 percent after the announcement.
“While consumers are as eager as ever to get away, they remain conscious of fitting travel into their budget,” said Silvija Martincevic, Affirm’s chief commercial officer. “According to a recent Affirm survey, 74 percent of Americans say they’ll spend more on travel this holiday season than ever before, while 60 percent are concerned that they can’t afford to travel as they would like to.”
“Travel is an area where we have made substantial investments,” said Geoff Kott, chief revenue officer at Affirm, according to American Banker. “And it’s more important than ever for merchants to offer flexibility at checkout.”
A Protocol article noted that Affirm had been planning to push BNPL into travel before the COVID-19 pandemic.
“We spent 2019 really figuring out what it would take to bring Affirm to travel,” said Max Levhin, Affirm CEO. “2020 was supposed to be the year of travel. Of course, 2020 was not the year of travel for anyone. Travel basically fell off a cliff.”
Though Affirm and other BNPL lenders still compete heavily with credit card companies, they may gain an advantage as credit card issuers figure out how to bring their own installment options into the travel spending category.