Affirm surges 20% as fintech rallies on tariff pause, but risk remains

The fintech sector is rallying Wednesday following the Trump administration’s announcement of a 90-day pause on planned tariffs. 

Affirm was up 20%, Toast and Block rose 13% and PayPal increased 10%. 

The 90-day pause doesn’t eliminate the threat of tariffs — it just delays it. Investors are still pricing in risk, including inflation, discretionary pullbacks, hardware import costs and credit exposure.

Legacy payment networks such as Visa and Mastercard, both up 6%, continue to benefit from inflation and their structural ties to nominal GDP. These companies take a percentage of every transaction. That makes rising prices a tailwind.

“If prices are moving up for certain goods and you’re paying with a credit card, it’s actually good for the credit card companies,” said Dan Dolev, a fintech analyst at Mizuho.

Their pricing structure has historically made them resilient during inflationary periods, including recessions. The situation is less rosy for the new wave of consumer lending fintechs.

Affirm, which specializes in allowing consumers to buy now and pay later, could suffer if consumers pull back spending when the pause is lifted as a result of tariffs causing prices to rise. The San Francisco-based company could see its revenue less transaction costs margins — essentially what the company pockets after paying processing fees and customer incentives — drop more than 22% in that scenario, according to a Goldman Sachs estimate on Tuesday. 

The adoption of buy now, pay later may rise as consumers hit credit limits, said SIG analyst James Friedman, but he added that the model remains untested in a downturn. 

Toast, Block and Fiserv, which was up 6%, develop software used by restaurants and small businesses. Those companies could face rising hardware costs and softening demand from customers if the tariffs go through.

Meanwhile, cross-border payments — one of the most profitable segments for Visa, Mastercard and PayPal — remain under pressure as global travel slows and e-commerce flows adjust to the uncertainties of Trump’s tariffs. 

Even remittance players such as Remitly and Western Union, both up 8%, could face longer-term pain if immigration pipelines slow or remittance corridors tighten under regulatory scrutiny. Similar to cross-border commerce, remittances depend on a steady flow of people and transactions, both of which remain fragile.