Dive Brief:

• Buy now, pay later provider Affirm on Tuesday announced it’s launching a spending account tied to its debit card.
• The account will offer savings account-type interest, ATM access and direct deposit capability, Affirm President Libor Michalek said during the San Francisco-based company’s investor forum in New York. The account “will be generally available at a later date,” a spokesperson said in an email, declining to provide a specific date.
• As of October, Affirm’s debit card had 500,000 active users and had reached $100 million in gross merchandise volume, Michalek said. In seeking to grow the card’s user base, Affirm is “going after the full card market,” he said.

Dive Insight:

Affirm’s debit card lets customers pay for a purchase right away, or request to pay over time via the company’s app. Executives have said the card enables the company to capture more brick-and-mortar spending and be used for habitual, lower-value transactions. Adding the spending account “creates a tighter experience” with the card, Michalek said.

Among the key benefits noted Tuesday by Affirm CEO Max Levchin: Refunds that go to an Affirm account are there for consumers to spend again immediately.

“This is actually something I learned at my last payment network,” Levchin said, referring to his work for digital payments giant PayPal, which he co-founded. “Going from no available balance to some stored balance is a force multiplier on transactional velocity,” meaning consumers with money in their pockets tend to spend it more quickly, he said. 

Additionally, if consumers keep a balance in the account, especially lower-income consumers, or those with lower credit quality, “it is a fundamentally important underwriting signal,” Levchin said. 

Affirm has quietly offered a savings account to learn about consumer behaviors, with the goal of creating enough trust with users to transition that into a transactional account, Levchin said. With the account launch, however, the company is “not constructing a backdoor into banking,” Levchin said in response to an analyst question. “We do not intend to lend from these deposits,” he said. That’s “not on the roadmap right now,” he added.

The company doesn’t have a bank charter and isn’t looking for one at the moment, Levchin said. “It’s entirely a feature-related development,” he said of the account offering. “We won’t seek a bank charter until we see a feature that we have to have one for,” he added. 

During the investor forum, Affirm also said it’s taking a “disciplined approach” to entering new markets, highlighting the U.K. as its next move outside the U.S.

Pat Suh, Affirm’s senior vice president of revenue, said the company sees an opportunity to go beyond short-term, no interest loans in that market. Affirm has a small group of large partners that are multinational, such as Shopify, Levchin noted.

“We have hired a seasoned team, we have a country manager and we have the licenses,” Suh said of expanding into the U.K. “We’ve been having active conversations with a number of partners.”

Affirm also circled the business-to-business area as an opportunity for growth, and on Tuesday named its second B2B partner, Best Buy. That follows the Nov. 2 announcement that Amazon Business was adding Affirm as a payment option for sole proprietors.