Nilson Report

Issue 1179 | Jul 2020


Companies featured in this issue include:

Asia-Pacific General Purpose Cards Market Shares in 2019

Asia-Pacific Spending, Transactions, and Cards by Global Brand

Asia-Pacific Market Shares of Purchase Transactions 2007-2019

Second 50 Largest Debit Card Issuers in the U.S.

Europe’s Top 10 Mastercard and Visa Issuers 2019 vs. 2009

Top General Purpose Card Issuers in Europe

Top 50 Credit Card Issuers in Europe

Top 50 Debit Card Issuers in Europe

U.S. Visa and Mastercard Commercial Card Products

Investments & Acquisitions–June 2020

Top General Purpose Card Issuers in Europe

The 50 largest issuers of general purpose credit and debit cards–Visa, Mastercard, Amex, Diners, Maestro, UnionPay, and domestic-only–are ranked on page 8 based on spending for good and services in 2019.

1. Lloyds/MBNA, United Kingdom
$280.83 billion purchase volume
2. Sberbank, Russia
$200.68 billion purchase volume
3. Credit Agricole, France
$183.42 billion purchase volume
4. NatWest, U.K./Ireland
$180.00 billion purchase volume
5. Barclays, United Kingdom
$177.68 billion purchase volume

Full access to the Top General Purpose Card Issuers results in Europe is available when you subscribe to the Nilson Report.



Buy Now, Pay Later Firms Expand Products and Services

Buy now, pay later (BNPL) firms that operate in the U.S., include Affirm, Afterpay, ChargeAfter, Klarna, PayPal, Sezzle, Splitit, and Zip (QuadPay). BNPL, which has been a rapidly growing subset of the credit industry in recent years, has boomed since the Covid-19 pandemic sent millions of Americans to online stores for the first time.

Companies that offer BNPL have two approaches to the market. Some have consumer-facing brands. Consumers know the credit provider is not the merchant. Others essentially offer a white-label service that suggests BNPL credit is being extended by the merchant.

Affirm and Klarna are consumer-facing brands. Both sell BNPL credit to their respective growing merchant networks in a business-to-business marketing model. And both have moved beyond the limitations associated with incrementally building merchant networks by selling directly to consumers via mobile apps. Those business-to-consumer marketing efforts began in 2019. Direct connection to the consumer opens BNPL to any online seller. No dedicated web checkout page connection is required between the merchant and the BNPL provider. Merchants receive payments via virtual Visa and Mastercard cards.

Now Affirm and Klarna are moving beyond their role as payment providers within the shopping ecosystem by adding other financial products and related services that leverage the loyalty they have developed in their mobile app-based BNPL businesses. 

In the U.S., Klarna claims 7.8 million customers and has direct connections with over 4,000 U.S. merchants, including Adidas, The North Face, and Sephora. Klarna’s credit offerings, which are backed by Utah-based WebBank, include options to pay 30 days later, by using four biweekly installments, or by financing purchases with 6- to 36-month installment payments. Purchases can occur at the online checkout page of any of the 200,000 merchants worldwide with direct connections to Klarna or by using Klarna’s mobile app. Consumers with Klarna’s mobile app can also buy from merchants outside Klarna’s network. Klarna generates a one-time-only virtual Visa card payment. Sutton Bank is the U.S. card issuer.

Klarna estimates that 70% of purchases made at its U.S. merchant partners are completed with credit cards, while 85% of repayment transactions on its BNPL platform are billed to a debit card.

To target a younger American demographic that favors using debit cards, Klarna has added a no-fee loyalty program called Vibe for purchases made from the company’s branded app, which has had 4.5 million downloads since its July 2019 launch. Klarna says 1.0 million consumers are monthly users of the app. It sees Vibe as a reward to debit cardholders.

The Vibe loyalty program awards users a point for every dollar spent. A private label prepaid card is earned when point accrual thresholds are reached. Those cards are purchased through a broker or directly from Klarna’s network of merchants. Klarna says that Vibe will generate an average rate of return to the consumer of 2% for every dollar spent. The company will expand Vibe to mobile app users in Australia, Germany, Sweden, and the U.K. over the next 12 months.

In time, Klarna also expects to form partnerships with merchants to give Vibe users access to special events such as new product launches.

In Europe, Sweden-based Klarna owns a bank in Sweden that finances its BNPL products and issues virtual Visa credit cards to support purchases outside its global merchant network. Germany has become the first market in Europe for Klarna’s second financial services product. Deposit accounts (overnight and term) are available in Germany in partnership with fintech bank partner Raisin. 

Affirm, which launched its BNPL service in the U.S. in 2012, has grown to serve 5.3 million customers, including some in Canada since 2019. It maintains direct connections to a network of over 4,000 merchants. 

Initially, those merchants were oriented toward businesses with higher average order values. However, the company introduced a 0% APR three-month installment product in 2018 to pursue lower-value transactions. 

In 2019, Affirm’s BNPL platform facilitated $4.00 billion in purchase volume. One-third of its portfolio consists of 0% interest installment loans. Consumers can select 3-, 6-, or 12-month terms and for some larger purchases, consumers can split payments for up to 48 months. 

The company does not charge late fees or deferred interest. It touts how it treats consumers as the pillar on which its success is built. For merchants, it promises an 85% increase in average order value, as well as conversion rates of over 30% when consumers are presented with its user interface at checkout.

Affirm has added a high-yield savings account to its product mix. Users open the account through the Affirm mobile app. Deposits are held with New Jersey-based Cross River Bank. The savings account could prove especially relevant for Millennials and older Gen Z consumers. 

Affirm estimates 60% of the adults in these groups have access to less than $500 in emergency cash. 

The savings account pays 1.30% on deposits. There is no minimum monthly balance. In beta testing, one-third of users maintained recurring deposits and half of those made a deposit weekly. The average weekly deposit was $40. While there is no debit card tied to the Affirm savings product, some beta testers used an Affirm savings account as the payment account for their short-term installment loans.

The savings account is not designed to be a moneymaker for Affirm, which does not plan to use consumer deposits to underwrite credit loans. It does expect to benefit from increased consumer engagement in its mobile app and sees the savings account as a customer retention tool. 

Cross River Bank is the lender of record for Affirm installment loans. The bank also issues virtual bank cards when Affirm customers make purchases outside the network. 

For consumers able to cover an online purchase in its entirety with a traditional credit or debit card payment, the option to instead pay Affirm 0% on installments while earning 1.30% with the Affirm savings account could be a compelling proposition. Savings account activity will not affect underwriting decisions for loans from Affirm.


David Sykes is Head of Klarna U.S. in New York,,

Michael Linford is CFO at Affirm in San Francisco,,

Prior issues: 1175, 1172, 1170, 1165, 1160, 1158, 1149, 1148, 1140

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