Affirm CEO says AI agents will favor interest‑free loans
Affirm’s Max Levchin told analysts AI shopping agents are likely to steer shoppers toward interest‑free installment loans, a shift that could reshape financing and affect investors.
On Thursday, Nov. 5, Max Levchin, chief executive of fintech lender Affirm, said that artificial‑intelligence (AI) shopping agents are expected to guide consumers toward interest‑free installment loans rather than interest‑bearing credit. Levchin made the comment during the company’s fiscal first‑quarter earnings call, noting that agents that compare payment options could “steer shoppers toward loans that spread out the purchase price without adding interest.”
In the September quarter, interest‑free installment plans represented 28% of Affirm’s gross merchandise volume (GMV), while interest‑bearing loans made up the remaining 72%.
Affirm reported a 35% revenue increase to $1.3 billion, but its shares fell more than 9% in after‑hours trading after a near 8% decline during the regular session. The company also disclosed that the share of U.S. loan balances 30 days past due rose to 2.9% in September, up 35 basis points from June and nine basis points from a year earlier.
Why it matters for investors and consumers
The shift toward interest‑free financing could change the economics of Affirm’s loan portfolio. Interest‑free loans generate revenue primarily through merchant subsidies, whereas interest‑bearing loans earn margin from borrowers. If AI agents consistently favor the former, the company may see higher transaction volume but lower average interest income.
Key metrics from the quarter illustrate the scale of the business:
GMV rose 34% to $14.4 billion.
Average order value fell to $258, helped by lower purchase minimums.
Active consumers increased 19% to 28.7 million, with transactions per consumer up 19% to 7.3.
Affirm Card spending more than doubled to $3.3 billion; active cardholders grew to 6 million.
More than 80% of Card loans historically carry interest.
Active merchants rose 48% to about 621,000.
For investors, the rise in delinquency rates—2.9% of balances past due—raises credit‑risk concerns, especially as the company expands AI‑driven financing offers. CFO Rob O’Hare said a September test of loan approvals increased the provision for credit losses, but the test loans remain on the balance sheet.
Consumers could benefit from easier access to zero‑interest financing, especially for lower‑priced items that now meet the reduced minimum purchase threshold. However, Levchin warned that “AI commerce can be messy,” citing the risk of unintended purchases and fraud.
What to watch next
Affirm’s roadmap includes two notable initiatives:
Launching card‑specific financing offers this quarter, which could embed interest‑free options directly into the Affirm Card experience.
Piloting “Edge,” a platform that would allow other issuers’ debit cards to offer Affirm installment loans.
The company’s fiscal 2027 outlook targets at least 30% growth in GMV. Analysts will be monitoring whether AI agents actually increase the share of interest‑free volume and how that impacts overall profitability.
Broader industry observers are also watching how AI‑driven financing intersects with cross‑border payments. A recent analysis notes that AI agents could control up to 5% of cross‑border payment flows, underscoring the growing influence of autonomous shopping tools (see related analysis).
What this means for you
For investors: Expect more scrutiny of Affirm’s credit‑loss provisions and the mix of interest‑free versus interest‑bearing loans. A higher proportion of zero‑interest financing could pressure margins, even as transaction volume climbs.
For shoppers: AI assistants embedded in browsers or voice platforms may start suggesting interest‑free installment plans by default. While this can lower upfront costs, it also means you’ll be financing purchases without paying interest—so be sure the total price fits your budget.
For merchants: Brands can sponsor interest‑free loans on specific SKUs, and future tools may let a seller’s AI agent automatically present those offers to a shopper’s agent, potentially boosting conversion rates for high‑margin items.
Overall, the integration of AI agents into the checkout experience could reshape how consumers finance everyday purchases, and the balance between volume growth and credit risk will be a focal point for the market in the months ahead.
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