The Irrational Mind | With Kristen Berman

How Does Affirm Get Us to Buy Now Pay Later?

Apr 19, 2022

Nupur Kantamneni, responsible for Consumer Product, discusses the behavioral strategies used by Affirm for their flexible buy now pay later model. Topics covered include understanding payment terms, mental models for onboarding experiences, the appeal of zero interest, revenue generation, and aligning incentives. The podcast also explores the compromise effect, surprises in user onboarding, missed payments handling, partnerships, and the pros and cons of buy-now-pay-later.

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Introduction

00:00 • 3min

Flexible Payments with Affirm

03:12 • 5min

The Compromise Effect and the Power of Relativity in Decision Making

07:46 • 2min

Surprises and Experiments in Onboarding Users

09:40 • 17min

Missed Payments and Handling Users

26:20 • 17min

Partnership between Peloton and Affirm and Reflection on Credit Scores

43:40 • 2min

Exploring the Pros and Cons of Buy-Now-Pay-Later

46:02 • 3min

In the last few years, buy now pay later has become the hottest development in the digital payment space. The flexibility of this type of models can bring many benefits for companies that know how to implement them, but the irrational decisions that can arise should also be part of a company's responsibility. In this episode, our host Kristen Berman talks with Nupur Kantamneni, responsible for Consumer Product, one of three product pillars at Affirm. We delve into the behavioral strategies that provide such a flexible business model for Affirm, as well as mental models and the positive emotions that come with free stuff. Join us and discover how loans inside Affirm are radically different from other credit companies!

Jump straight into:

(01:09) - Exploring how Affirm is helping users to understand the way that carts, payment methods and terms work.

(07:46) - The compromise effect: The truth about comparison, decisions to save money and picking the middle options.

(11:32) - Establishing mental models: The science behind the successful onboarding experiences within Affirm’s savings accounts.

(15:58) - Positive emotions that come with free stuff: Why the appeal of zero interest with full transparency and no hidden cost is simply irresistible.

(18:48) - Affirm two ways to make revenue: Does the ‘buy now pay later’ model encourage people to spend more?

(24:13) - The challenge to set up our own payments and the alignment of incentives that lets Affirm stand out.

(29:33) The opportunity to move my payment date: What are Affirm's flexibility offers that other lenders do not provide?

(35:06) Virtual debit cards and the types of consumer products that Affirm is trying to offer to users and why some work and others don’t.

(39:24) - Choosing priorities and Affirm’s responsibility to improve the life of its users.

Episode resources

Affirm

Predictably Irrational by Dan Ariely

Nupur Kantamneni Linkedin

Thank you for listening to The Science of Change podcast. Reach out to Kristen through LinkedIn and visit The Irrational Labs website for more information on behavioral science.

This show is presented by SetSail (follow on LinkedIn) and produced by Kristen Berman and Studio Pod Media. The executive producer is Rachael Roberts. All episodes are written by Kristen Berman and Ying Lin with experts, and script editing by Jack viewer. Special thanks to Lydia Trupe for fact-checking and citations. Music and editing provided by nodalab.