Visa vs. Affirm: Can the BNPL Rebel Charge Past the Credit Card King?

The payments world is in the middle of a dramatic transformation. For decades, credit card titans like Visa Inc. V ruled the global transaction network, setting the gold standard for speed, security and reliability. Now, the rise of digital-first players such as Affirm Holdings, Inc. AFRM is rewriting the rules, offering consumers flexible, transparent and often interest-free ways to finance their purchases.As shoppers increasingly move away from traditional credit toward installment-based models, the “buy now, pay later” (BNPL) revolution has become one of the most powerful forces reshaping modern finance. Visa remains a fortress of profitability and scale, while Affirm represents the tech-savvy challenger catering to new-age consumers who value clarity and choice over revolving debt.It is a classic matchup of legacy dominance versus digital disruption: Visa, the credit card king that built the past, against Affirm, the BNPL upstart defining the future. So, who is better positioned to ride the next great wave in payments? Let’s dive in.The Case for VisaVisa’s dominance across the global payments landscape is unrivaled. Operating in more than 200 countries, Visa processes an enormous share of the world’s transactions, expected to surpass 257 billion in fiscal 2025. That scale forms the foundation of its durable business model: Visa earns high-margin revenue through transaction fees, licensing and value-added services, without taking on direct credit risk like lenders do.In the last reported quarter, Visa’s net revenues climbed 14.3% year over year to $10.2 billion, powered by robust cross-border volumes and strong consumer spending resilience. Payments volume grew 8%, while cross-border transactions rose 12%, underscoring the strength of global commerce. Adjusted operating income rose 14.9% to $6.9 billion, keeping Visa’s margins comfortably close to 68%.Its balance sheet remains pristine, with a long-term debt-to-capital ratio of just 33.6%, far lower than Affirm’s 71.8%. That financial strength gives Visa tremendous flexibility to invest, repurchase shares, and weather downturns.However, the payments landscape is evolving quickly. Younger consumers are gravitating toward flexible, short-term payment options instead of revolving credit cards. That trend plays directly into the hands of BNPL players like Affirm. Moreover, Visa’s growth in mature markets is expected to slow as card penetration approaches saturation, limiting upside compared with nimble fintechs expanding into new segments.Regulatory scrutiny is also intensifying. Authorities in the United States and the U.K. have raised concerns about the duopoly between Visa and Mastercard Incorporated MA, which could constrain their pricing power or invite legal challenges.To its credit, Visa is not standing still. It continues to invest in tokenization, real-time payments and BNPL partnerships, while experimenting with blockchain and stablecoin-powered cross-border settlements. The latter is expected to be transformative, reducing friction, cutting costs and freeing up capital trapped in banking intermediaries.Visa currently trades below its average analyst price target of $398.16, implying 15.2% upside. Yet, compared with Affirm’s faster growth and higher return potential, Visa may represent steady reliability rather than explosive opportunity. Affirm trades below its average analyst price target of $95.50, leaving a potential for 30.7% upside.The Case for AffirmAffirm has rapidly become one of the most recognized names in BNPL, a category that is redefining how consumers pay for everything from electronics to groceries. The company’s transparent, interest-free installment loans appeal to shoppers wary of credit card debt, while merchants benefit from higher conversion rates and average order values.Affirm’s merchant network spans more than 377,000 partners, including household names like Amazon, Shopify and Costco, giving it prime visibility at the digital checkout counter. That integration ensures millions of consumer touchpoints daily, strengthening brand loyalty and usage frequency. Its latest results tell a story of momentum and scale. In the fourth quarter of fiscal 2025, Affirm’s gross merchandise volume (GMV) soared 43% year over year to $10.4 billion, driven by rising transaction frequency and broader category adoption. Active consumers climbed 24% to 23 million, and the repeat transaction rate hit 95%, underscoring high customer satisfaction and stickiness.Affirm’s edge lies in its data-driven underwriting model, powered by AI algorithms that assess real-time credit risk. This has helped reduce delinquency even as it expands. While profitability remains a work in progress, the company’s improving operating efficiency and expanding scale are boosting margins steadily. Importantly, its strategic push into everyday purchases, travel, gaming and small-ticket items opens the door to recurring, high-frequency usage, a key to sustainable growth.Affirm does face competition from established networks and other BNPL providers like Klarna Group plc KLAR and Afterpay. Walmart’s decision to shift from Affirm to Klarna highlighted how fragile those relationships can be. Still, Affirm’s transparent fee structure, strong brand identity, and deep API integration with retailers make it one of the most trusted BNPL platforms in the market. In an era where consumers crave financial flexibility and transparency, Affirm’s technology-first strategy and strong merchant ties give it a unique growth runway. As Visa adapts to protect its turf, Affirm is sprinting ahead to capture the next generation of digital spenders.How Do Zacks Estimates Compare for V & AFRM?While Visa’s growth outlook is steady, Affirm’s projections reflect a company in transformation, one that is scaling toward sustainable profitability and expanding its total addressable market.The Zacks Consensus Estimate for Visa’s fiscal 2025 earnings is pegged at $11.43 per share, a 13.7% year-over-year growth, reflecting solid but mature expansion. Revenues for the current year are expected to reach $39.8 billion, a jump of 10.9% from a year ago. It beat earnings estimates in each of the past four quarters with an average surprise of 3.9%.Visa Inc. Price, Consensus and EPS Surprise Visa Inc. price-consensus-eps-surprise-chart | Visa Inc. QuoteIn contrast, Affirm’s fiscal 2026 earnings estimate stands at 85 cents per share, marking a remarkable 466.7% surge year over year, while revenues are expected to jump 23.8%. AFRM has also beaten earnings estimates in each of the past four quarters, but with an average surprise of 105.5%.Affirm Holdings, Inc. Price, Consensus and EPS Surprise Affirm Holdings, Inc. price-consensus-eps-surprise-chart | Affirm Holdings, Inc. QuoteValuation: V vs. AFRMOn a price-to-sales basis, Visa sits at 13.86X forward revenues, significantly above Affirm’s multiple of 5.29X. Affirm’s cheaper P/S multiple leaves room for significant growth as business expansion accelerates.Image Source: Zacks Investment ResearchPrice Performance ComparisonVisa has returned 15.4% in the past year, buoyed by resilient spending trends and market optimism. Affirm, on the other hand, has delivered a stunning 55.1% return, riding the tailwinds of surging BNPL adoption and operational improvements. The S&P 500 gained 16.2% during the same period.Price Performance – V, AFRM & S&P 500Image Source: Zacks Investment ResearchConclusionVisa remains a financial titan, steady, profitable, and globally dominant. But the payments ecosystem is evolving, and consumers are rewriting the rules of credit. Affirm’s rapid growth, advanced underwriting, and expanding merchant network position it to benefit directly from this generational shift.While Visa continues to deliver consistent returns, Affirm looks better poised for outsized gains, thanks to its business model and long runway for adoption. For investors betting on where payments are headed next, the BNPL rebel is likely to just outpace the credit card king. Affirm currently has a Zacks Rank #2 (Buy), while Visa has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.5 Stocks Set to DoubleEach was handpicked by a Zacks expert as the #1 favorite stock to gain +100% or more in the coming year. While not all picks can be winners, previous recommendations have soared +112%, +171%, +209% and +232%.Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.Today, See These 5 Potential Home Runs >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Mastercard Incorporated (MA): Free Stock Analysis Report Visa Inc. (V): Free Stock Analysis Report Affirm Holdings, Inc. (AFRM): Free Stock Analysis Report Klarna Group plc (KLAR): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks