Affirm (AFRM) Q2 2026: Affirm Card GMV Up 160% as Product Diversification Accelerates
Affirm’s Q2 saw the Affirm Card’s GMV surge 160% year-over-year, cementing its shift from niche to core growth engine. Merchant and consumer diversification accelerated, with wallet partnerships and “other” category expansion broadening the platform’s reach. Management’s focus on regulatory certainty, funding cost advantages, and product innovation signals a durable, multi-pronged growth trajectory into FY27.
Summary
- Affirm Card Drives Engagement: Card GMV and active holders grew triple digits, shifting the card from experiment to pillar.
- Merchant Base Broadens: Wallet partnerships and “other” category verticals expand Affirm’s reach beyond top five merchants.
- Funding and Regulatory Moves: Bank charter application and ABS execution position Affirm for long-term stability and cost leverage.
Business Overview
Affirm is a leading buy now, pay later (BNPL) platform, enabling consumers to split purchases into installments at the point of sale. The company generates revenue primarily from merchant fees and consumer interest, with its business spanning integrated merchant partnerships, the Affirm Card, and wallet integrations. Major segments include direct merchant BNPL, the rapidly scaling Affirm Card, and a growing array of verticals within the “other” category, which aggregates long-tail merchant and wallet-driven transaction volumes.
Performance Analysis
Affirm’s Q2 performance was defined by rapid expansion in its card business and broadening merchant footprint. The Affirm Card saw GMV climb nearly 160% year-over-year, with active cardholders up 121% and 0% deals up 190%. This marks a transition from the card being a novelty to a material contributor, fueling higher user engagement and transaction frequency. The “other” category, now 15% of total GMV and growing triple digits, underscores Affirm’s success in onboarding long-tail merchants and wallet partners, diversifying away from top merchant concentration.
Funding cost tailwinds further supported margin resilience. The company executed an ABS (asset-backed securities) deal with spreads under 100 basis points and weighted average yields below 4.6%, the most favorable since 2021, reflecting market confidence in Affirm’s credit controls. While take rates softened slightly year-over-year due to higher 0% loan mix, lower funding costs and disciplined credit management sustained robust margins. Management reiterated that credit metrics remain tightly controlled, with no signs of consumer stress.
- Card-Driven Growth: The Affirm Card’s triple-digit expansion is now a core driver, not just an add-on.
- Merchant Diversification: Wallet partnerships and “other” verticals are accelerating merchant count and diluting concentration risk.
- Funding Cost Advantage: ABS market execution and forward flow deals are reducing cost of funds, supporting margin stability.
Affirm’s operational leverage is increasingly visible, with margin expansion driven by revenue growth outpacing transaction cost increases. The company’s ability to sustain growth while maintaining credit quality and funding access stands out in a volatile consumer credit landscape.
Executive Commentary
"The card is just continuing to grow very quickly. GMV year-over-year for the quarterly reporting was up just under 160%. Active card holders went up 121%. Zero percent deals on the card went up 190% year-over-year. It's not the only growth engine, but it's a big growth engine for our metrics. And it's now a material to the overall business. It's no longer a kind of a cool novelty product for our diehard users. It's helping us create more diehard users."
Max Levchin, Founder & Chief Executive Officer
"The last [ABS] deal we just priced was done with a spread of under 100 basis points. It's really remarkable. We haven't done that since 2021. The weighted average yield in the deal was below 4.6%. Again, we haven't seen that kind of cost of financing since the Zerp. And so we're operating and executing in a capital market. It's really the best we've seen post the rate movement part of the world."
Rob O'Hare, Chief Financial Officer
Strategic Positioning
1. Affirm Card Evolution
The Affirm Card has rapidly shifted from a niche experiment to a flagship product, now representing a material portion of GMV and driving deeper consumer engagement. Management emphasized ongoing investment in card features and adjacent products, with the card now serving both as a user acquisition funnel and a retention lever.
2. Merchant and Wallet Ecosystem Expansion
Affirm’s long-tail merchant and wallet partner strategy is reducing concentration risk, as evidenced by explosive growth in the “other” GMV category and a 42% jump in active merchant count. Wallet integrations bring Affirm to new merchant verticals, with onboarding speed and volume scaling faster than direct integrations.
3. Funding Cost and Regulatory Certainty
Affirm’s execution in the ABS market and its bank charter application signal a strategic push for funding cost stability and regulatory clarity. Management views the bank charter as a long-term investment in regulatory certainty, not a near-term funding lever, but one that could unlock new products and margin opportunities over time.
4. Product and Channel Innovation
AI-powered tools like Boost.ai and Adapt.ai are enabling merchants to optimize promotional spend and conversion rates, with early adoption showing promise for incremental GMV and a shift toward an advertising-like revenue model. Platform integration with PSPs (payment service providers) and core banking software (FIS, Fiserv) further extend Affirm’s reach into new channels.
5. International and New Verticals
International expansion, especially in the UK, and new verticals like services through the Intuit partnership, are in early stages but represent incremental growth levers. The pipeline includes scaling with major partners like Shopify and Wayfair, and testing new use cases such as rent payment timing and B2B2C service financing.
Key Considerations
Affirm’s Q2 underscores its evolution from a merchant-concentrated BNPL provider to a diversified, multi-channel financial platform. The strategic context is defined by a shift to card-centric growth, wallet and vertical expansion, and a focus on funding and regulatory durability.
Key Considerations:
- Card Adoption Momentum: The Affirm Card’s 160% GMV growth and 121% active user gain signal a major engagement lever, with 0% deals catalyzing both acquisition and cross-sell opportunities.
- Merchant Base Diversification: The “other” GMV category, now tied for second largest, reflects successful wallet and long-tail merchant onboarding, reducing reliance on top merchant partners.
- Funding Cost Tailwind: ABS execution at sub-100bps spreads and robust forward flow demand provide margin resilience and capital access in a shifting rate environment.
- Regulatory and Product Innovation: The bank charter application and AI-powered merchant tools position Affirm for future regulatory clarity and incremental revenue streams.
- International and New Use Cases: Early traction in UK and services verticals (via Intuit) broadens Affirm’s total addressable market, though these remain small contributors near-term.
Risks
Affirm faces persistent regulatory scrutiny, with ongoing oversight from federal and state entities and a multi-year timeline for potential bank charter approval. Competitive intensity remains high, as rivals push aggressive promotions and cashback offers, though Affirm’s transparent 0% model has so far insulated merchant pricing. Any deterioration in consumer credit or funding market volatility could pressure margins, though management reports no current stress in credit quality or funding partner demand.
Forward Outlook
For Q3 and Q4, Affirm guided to:
- RLTC (revenue less transaction costs) take rates slightly above 4%
- GMV growth decelerating to 30% in Q3 and 25% in Q4, reflecting tough comps from a large merchant transition
For full-year 2026, management raised guidance for margin expansion:
- Margin expansion commitments now higher than prior 90-day outlook
Management cited:
- Strong funding cost tailwinds from ABS and forward flow channels
- Continued scaling of the Affirm Card and wallet merchant base
Takeaways
- Product-Led Diversification: Affirm’s card and wallet-driven expansion is diluting merchant concentration and powering user growth, with “other” GMV now a major vertical.
- Margin and Funding Execution: ABS and forward flow funding access, combined with disciplined credit management, are sustaining margin strength even as 0% mix increases.
- Strategic Optionality: Bank charter pursuit and AI-driven merchant tools set the stage for future product and revenue innovation, while international and new verticals remain early but promising.
Conclusion
Affirm’s Q2 2026 results validate its evolution into a multi-product, multi-channel platform, with the Affirm Card and wallet integrations now driving both GMV and engagement. Funding cost advantages and a focus on regulatory certainty underpin margin durability, while product and channel innovation expand Affirm’s long-term opportunity set.
Industry Read-Through
Affirm’s results highlight a broader industry pivot from merchant concentration to platform diversification, as BNPL providers seek growth beyond core e-commerce verticals. The card’s rapid adoption and wallet partnership model provide a blueprint for competitors facing saturation with large merchants. ABS market receptivity and private credit demand for BNPL assets signal investor confidence in disciplined credit models, but also underscore the need for robust underwriting as funding channels evolve. Regulatory initiatives, including bank charter applications, may become more common as BNPL platforms seek stability and product flexibility amid shifting political and compliance landscapes. AI-powered merchant tools and embedded finance partnerships (e.g., with FIS, Intuit) are emerging as key differentiators for scale and revenue diversification across the payments and lending ecosystem.