Buy now, pay later (BNPL) has become a significant lifeline for many consumers. That’s why investors should pay close attention to Affirm Holdings Inc. (NASDAQ: AFRM), one of the largest BNPL companies.
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And there are reasons to believe that Affirm has a long runway for growth. For one, Americans are taking on substantial amounts of debt.
“All major loan categories tracked in the report saw increases as well. Credit card balances topped $1.2 trillion, rising 7.3% from the fourth quarter of last year and logging the smallest yearly increase since 2021,” reported CNN. “Higher levels of household debt are to be expected as they can reflect factors such as population growth, strong economic conditions, holiday-related spending and the rise of e-commerce.”
And second, that means more Americans are turning to buy now, pay later borrowing.
Buy Now, Pay Later Adoption Continues to Accelerate
U.S. consumers spent roughly $20 billion using BNPL in just the November–December period, nearly 10% higher year over year.
Zooming out, the long-term opportunity is even more compelling. Global BNPL transaction volume is projected to reach $560 billion to more than $900 billion by 2030, while the U.S. market alone is expected to approach $200 billion by 2026.
And, as noted by MarketWatch, shoppers used BNPL to spend about $20 billion between November 1 and December 31, a 9.8% year-over-year (YoY) increase.
Wall Street is Bullish on BNPL
Wall Street is taking note of those trends. Analysts at Needham upgraded the stock to a buy with a $100 price target. The firm added that, “AFRM has submitted an application to establish Affirm Bank, a proposed Nevada-chartered industrial loan company,” as quoted by CNBC.
In fact, if approved, this would be a game-changer. Owning a banking entity could help lower funding costs, improve margins, reduce reliance on third-party capital markets, and help enhance regulatory flexibility.
JPMorgan Chase & Co. (NYSE: JPM) analysts also upgraded AFRM to market perform, calling it a “long-term secular winner at the expense primarily of the credit card industry.”
BNPL is a Direct Threat to the Credit Card Industry
BNPL companies like Affirm are a direct threat to the credit card industry. One reason is that BNPL often offers a “free” alternative (no interest for consumers) that draws users away from credit cards, especially for e-commerce. This cuts into fee income for card issuers.
It’s also important to note that BNPL is becoming very popular among the younger generations. Over half of Gen Z (51%–59%) and Millennials (48%–58%) report using buy now pay later, often making it more common than credit cards for these demographics.
Three, according to a 2025 report from Morgan Stanley, “More than a quarter of U.S. consumers have used ‘Buy Now, Pay Later’ (BNPL), a type of short-term installment loan, to finance purchases. Although BNPL still represents a small share of total U.S. e-commerce sales, it is expanding rapidly: BNPL loans financed 6% of e-commerce in 2024, a jump from 2% in 2020. Additionally, consumers are increasingly using BNPL for everyday items like clothing and groceries, rather than to pay off big-ticket items.”
Investors Can Diversify With an ETF
If you’d prefer to diversify with other BNPL-related stocks, there’s also the iShares FinTech Active ETF (BPAY). With an expense ratio of 0.55%, the ETF offers exposure to technology disruption around the world and across multiple areas in finance, such as payments, banking, investments, insurance and software. Some of its 37 holdings include PayPal (NASDAQ: PYPL), Charles Schwab (NYSE: SCHW), Capital One Financial (NYSE: COF), Synchrony Financial (NYSE: SYF), Block (NYSE: XYZ) and Global Payments (NYSE: GPN).
As of January 2026, the BPAY ETF trades at $27 a share. The fund is actively managed by BlackRock and has about $9.8 million in total net assets. BPAY seeks to maximize total return by investing at least 80% of its net assets in equity securities of fintech companies that are driving disruption in financial services.
The Trends Line Up in Affirm’s Favor
Rising consumer debt, accelerating BNPL adoption, growing Wall Street support, and a massive long-term market opportunity all suggest that BNPL is not a passing fad—but a structural shift in how consumers pay.
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