Affirm's Long-Term Growth Potential: Riding the BNPL Wave

The buy-now-pay-later (BNPL) sector is no longer a niche experiment-it's a seismic shift in consumer finance. As GMInsights projects, the global BNPL market is expected to balloon from $235 billion in 2024 to a staggering $1.6 trillion by 2034 at a 21.2% CAGR, and investors are scrambling to identify the winners in this high-stakes race. Enter Affirm Holdings (AFRM), a company that's not just keeping pace but accelerating ahead. Let's break down why Affirm is uniquely positioned to capitalize on this explosive growth.

The BNPL Sector: A Gold Rush in the Making

The BNPL sector's meteoric rise is fueled by two unstoppable forces: e-commerce and Gen Z's appetite for flexibility. By 2025, the U.S. BNPL market alone is expected to hit $122.26 billion, growing at an 8.5% CAGR through 2030, according to a Business Wire report. This isn't just about millennials avoiding credit card debt-it's about a structural shift in how consumers and businesses transact. For context, the global B2B e-commerce market is set to hit $36 trillion by 2026, a trend also noted by GMInsights, and Affirm's partnerships with Shopify and Amazon position it to ride this wave.

Affirm's Rocket Fuel: Partnerships and AI-Driven Innovation

Affirm's third-quarter 2025 results are a masterclass in execution. Revenue hit $783 million, up 36% year-over-year, while Gross Merchandise Volume (GMV) surged to $8.6 billion-also a 36% increase, according to Affirm's Q3 results. But the real story lies in its ecosystem. With 358,000 active merchants (up from 254,000 in 2023), Affirm isn't just a payment option-it's a platform. Its integration with Apple Pay, Affirm's AI underwriting, and partnerships with Highnote have turned BNPL into a seamless, wallet-friendly experience.

What sets Affirm apart? Its AI-driven underwriting engine. By leveraging machine learning to assess credit risk in real time, Affirm minimizes defaults while offering personalized repayment plans. This isn't just tech-it's a competitive moat. As one analyst noted in a Monexa analysis, "Affirm's algorithms are the reason it's outpacing Klarna and Afterpay in U.S. adoption."

Navigating Risks: Regulation and Market Share

Critics will point to regulatory headwinds. The Consumer Financial Protection Bureau (CFPB) is tightening rules around BNPL, focusing on transparency and consumer protection, as Monexa explains.

As for market share, while exact figures for Q3 2025 aren't public, Affirm's 2024 revenue of $2.3 billion (second only to Klarna's $2.8 billion), according to Business of Apps data, underscores its dominance in the U.S. The global BNPL market may favor Klarna, but Affirm's U.S. focus is a fortress. With the U.S. BNPL market expected to grow to $184.05 billion by 2030, according to Business Wire, Affirm's local partnerships and brand loyalty give it a clear edge.

The Road Ahead: Beyond E-Commerce

Affirm's ambitions extend beyond retail. The company is eyeing healthcare and travel-industries ripe for BNPL adoption, a point highlighted by Monexa. Imagine booking a vacation or scheduling a medical procedure with interest-free installments. These verticals could unlock billions in new GMV, especially as Affirm's AI models adapt to sector-specific risks.

Final Verdict: A Buy for the Long Haul

Affirm isn't just a beneficiary of the BNPL boom-it's a catalyst. With a 36% GMV growth rate, a merchant network expanding like wildfire, and a tech stack that rivals the best in fintech, this is a company that's building for the future. Yes, the sector is crowded, and yes, regulations will tighten. But for investors with a 5–10 year horizon, Affirm's combination of innovation, scale, and strategic foresight makes it a compelling bet.