Affirm, the buy now-pay later (BNPL) payment provider experienced a 50% year-over-year increase in travel and ticketing gross merchant volume (GMV) for the third quarter, which ended in March and was recently reported in its Q3 2021 (January-March 2021) earnings statement.
The company reported that quarterly revenue rose 67% to $231 million in Q3 2021, compared to $138 million in Q3 2020.
In March, Affirm partnered with Vrbo, a travel and tourism booking company, to offer BNPL payment options for housing and lodging during holidays. Affirm CEO Max Levchin said during the earnings call that he expects travel expenditures to increase on “consumers' pent-up demand coming out of the pandemic.”
Affirm provides BNPL payment options for a variety of goods and services. In the U.S. last year, nearly 36% of people were interested in using, used, or had used BNPL, according to a Forrester webinar.
Consumer demand for BNPL options in travel in particular have picked up, based on Affirm's third-quarter results.
“GMV for the category [travel and ticketing] nearly tripled from the second quarter of fiscal 2021 and grew by more than 50% versus Q3 of last year, which was our pre-COVID quarterly high mark in travel,” Levchin said during the earnings call. “We are encouraged by this momentum and believe that the strengthening economy will provide another tailwind for Affirm.”
The travel industry is rebounding as nearly 1.6 million Americans boarded flights this year through May 10, compared to a low of 215,645 in 2020 for the same period and a high of 2.5 million people in 2019 for that period, according to the Transportation Security Administration.
During the COVID-19 pandemic, some Americans were able to pay down their credit card debts and build savings, as lockdown restrictions nationwide kept people at home and businesses closed. Levchin predicts that a huge spending wave is coming, according to a Bloomberg report.
“Americans have significant spending power coming out of the pandemic after paying down a record $83 billion in credit card debt and amassing $1.7 trillion in savings in 2020,” Levchin said during the earnings call.
In April, travel spending on Affirm grew as the category made-up 11% of total GMV compared to 9% in March 2021 and a mere 2% in September last year, Affirm CFO Michael Linford said during the earnings call.
“Given the investments in partnerships we've made in the category, we expect travel to contribute meaningfully in the fourth quarter and beyond,” Linford said.
Other BNPL companies focused on travel have also been responding to increased demand. Uplift, which focuses its BNPL on travel, partnered with Southwest Airlines recently to provide BNPL payment options on that airline, adding its to a portfolio of 15 other airline clients, which include United Airlines, Lufthansa and Alaska Airlines.
Greater flexibility in payment options may encourage consumers who are put off by the sometimes substantial expense of air travel, Uplift CEO Brian Barth told Payments Dive.