FinTechs are expanding their lending businesses from two places customers already visit: the app where their paychecks land and the card they bring to the store.
Two examples have jumped out recently. Chime is testing a credit line for customers who deposit at least $3,000 a month to qualify for Prime. Affirm’s debit card is bringing its installment loans to purchases outside the merchant checkouts where it has signed agreements.
Chime reported higher losses during its third-quarter earnings results Nov. 4 as more Prime members borrowed for the first time, while Affirm said as part of its first-quarter fiscal year 2027 earnings results Thursday (Nov. 5) that it typically earns less from the merchant side of a card transaction than from a checkout integration.
“On average, the interchange that we collect is probably lower than the average merchant discount rate that we would have through an integrated merchant,” Affirm Chief Financial Officer Rob O’Hare said during an earnings call. More than 80% of loans made through Affirm Card historically carried interest. Cardholders also make purchases that they pay in full.
Affirm’s earnings presentation counted 6 million cardholders who had used the card at least once in the preceding year, about 21% of its active customers. About 30% of card transactions took place in stores, and arranging installments before the purchase remained the most common use, CEO Max Levchin said. He also described approaching retailers after their customers had already used the card at their stores. A direct agreement lets a retailer extend its subsidized financing offers to cardholders as well as shoppers who select Affirm at checkout.
Affirm plans to introduce card-specific financing offers this quarter and is preparing to pilot Edge, which would make its installment loans available through other issuers’ debit cards, in the first half of 2027.
For lenders issuing cards, the competition continues after sign-up. The PYMNTS Intelligence report “The Rewards Gap: Turning Member Interest Into Growth” found in November that 40% of consumers with multiple cards cited better incentives, including cash back, as a factor in choosing which card to use.
Separately, the PYMNTS Intelligence report “Beyond Pay in 4: Many BNPL Buyers Would Pay for More Time” found in August that 82% of buy now, pay later users with four or more providers said they would pay interest for a longer repayment term, compared with 46% of those who used one provider.
From Deposits to Loans
Chime uses the deposits and spending it sees in customer accounts to decide how much to lend. People earning at least $75,000 were its fastest-growing group of new sign-ups.
“Among these members, a significantly higher share are direct-depositing and qualifying for Prime by depositing $3,000 or more per month,” CEO Chris Britt said on the Nov. 4 earnings call.
Chime originated $381 million in Instant Loans during the quarter. President and Interim Chief Financial Officer Mark Troughton said first-time borrowing by Prime members contributed to the rise in losses. Annualized loss rates for repeat borrowers were up to 50% lower than for first-time borrowers. Chime also introduced joint accounts and made investing available to all members, according to its earnings release.
Cash App’s numbers put the size of an app’s payment audience in perspective. Block reported 60 million Cash App accounts that transacted in September, compared with 9.4 million that met its primary banking definition, which held steady from June. The second group includes accounts with eligible wage inflows as well as accounts that qualify by spending at least $500 a month through Cash App services.
At Robinhood, the brokerage account itself is a source of deposits. CEO Vlad Tenev said Robinhood Banking received more money from Robinhood brokerage withdrawals than any other destination during the quarter. Opening a banking account still required a brokerage account.
At SoFi, existing members accounted for more than half of the products opened in the quarter. Its Oct. 27 earnings release counted services such as Relay, which tracks spending and monitors credit scores, alongside banking and investing products.
