Fiserv adds Affirm's BNPL to debit cards

• Key insights: Fiserv is adding Affirm's buy now/pay later loans to its debit cards.  
• What's at stake: The product will allow smaller financial institutions and credit unions to offer post-purchase, point-of-sale installment lending without program management overhead. 
• Forward look: The deal marks another distribution lane for Affirm as it looks to make its BNPL loans to more transactions. 

Affirm's buy now/pay later loans are getting a new distribution channel on Fiserv-issued debit cards.

The bank technology provider said Monday it is expanding its partnership with Affirm to bring installment loans to payment cards in an expansion of an existing deal with the BNPL lender that allowed Fiserv merchants to offer BNPL loans at checkout. 

The partnership will allow banks and credit unions to enable post-purchase BNPL loans on their debit cards, allowing consumers to break up most purchases into fixed payments anywhere debit cards are accepted.

"Community and regional banks and credit unions want to meet evolving consumer expectations around greater flexibility in how they pay for purchases all the while building a strong relationship with their primary financial institution," said Erik Wichita, Fiserv's head of card services, in a statement. "This partnership gives our clients a practical, scalable way to offer such payment flexibility through their existing debit products — helping them compete effectively, deepen customer and member relationships, and drive top-of-wallet engagement with their products." 

Fiserv will handle the technology integration into its menu of services it sells to financial institutions, and Affirm will be responsible for program management, such as underwriting, funding and loan origination. 

"By partnering with Fiserv, we're helping these institutions offer transparent pay-over-time options — so customers can get the flexibility they need from the banks and credit unions they already depend on, rather than having to look elsewhere," Affirm's Chief Revenue Officer Wayne Pommen said in a statement. 

For Affirm, the deal marks yet another distribution channel to originate more BNPL loans. For banks and credit unions, offering BNPL gives them a competitive advantage and additional stickiness to keep consumers' spending in-house, Ben Danner, a senior analyst at Javelin Strategy and Research, told American Banker. 

"Fiserv is one of the largest banking solution and services provider and Affirm is a household name in BNPL services," Danner said. "The pairing … [is] also important in that this will be sold as a turnkey solution, particularly with smaller banks and credit unions which may not have the resources to manage their own program on their own. It enables BNPL everywhere." 

The deal comes nearly a year after Affirm and FIS said they were bringing a post-purchase BNPL product to FIS-issued credit cards. Post-purchase BNPL offerings embedded into cards have emerged as a way for banks and credit unions to tap into the growing demand for installment lending without the need for heavy tech integrations. It also comes on the heels of a deal between BNPL lender Klarna and Walmart to offer post-purchase financing.

Enabling installment loans on cards has been a key strategy for BNPL providers because it allows them new origination channels at merchants where they may not have an existing relationship. Klarna has its own card, which it is counting on to bring in additional lending volume, and the Affirm Card has been credited with driving increased gross merchandise volume.