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Affirm is testing a free rewards program to compete with the popular credit card company points systems.

Consumers in the Affirm Rewards beta earn points when they submit each refund on the platform. In general, shoppers earn one point per $1 refunded, but that could change as Affirm continues to test the feature, the company says. londonbusinessblog.com. (That’s a slightly different model from the typical credit card program, which encourages high spending on a card so that users can get cash back or travel and product discounts.) The points accumulated can then be used toward a discount on any future Affirm purchases – Pay later loan at a participating retailer.

“By launching rewards, we can tell consumers, ‘Look, [Affirm] was a better financial decision even before rewards; but right now this is clearly just as rewarding and a smarter financial decision,” said co-founder and CEO Max Levchin, who was also a co-founder of PayPal. The feature is being tested by a small number of users, although the company declined to comment on the exact size of the test group or when it expects to roll out the product more widely.

Affirm is one of several buy now, pay later (BNPL) companies that have risen in popularity during the pandemic (competitors include Klarna and Afterpay). But some consumers point to credit card reward systems as a reason to stick with the old approach, despite complaints about fees and complicated reward redemption processes. Levchin believes Affirm’s rewards program should help attract more customers to its financing system. “It’s a pretty powerful incentive for people to want to make smart financial decisions for themselves and reward them in the same way that credit cards do, but without the pressure of, you know, ‘go spend more money, ’cause you’ll get a free flight.” ‘”, he says.

That’s not to say BNPLs haven’t taken their clumps, either. Some have even found themselves in hot water over concerns that they are encouraging young consumers to spend money as they may not be able to repay the loans. Last month, the Consumer Financial Protection Bureau (CFPB) said it plans to regulate BNPL companies to prevent potential harm to consumers.

Responding to widespread industry concerns, Levchin stressed that “not all companies that buy now, pay later are created equal.” Affirm underwrites all its transactions from the point of sale and tells consumers exactly what they are owed and over what period, without charging late fees. “We decided very early, very consciously, not to charge late fees because it’s a great benefit to consumers, because we’re actually putting the responsibility of being good insurers on our shoulders,” he says. .

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