Founded by one of the PayPal creators, Max Levchin, Affirm is another company that sees opportunity in confronting the monolithic banking industry. Affirm wants to hook up with consumers at the point of purchase. Instead of purchasers buying products using a credit, a process that can entail pretty stiff interest rates, Affirm will beat the credit card rates and save money for those people who are floating balances on their cards.
And how do they beat the banks? Well Affirm looks at traditional credit metrics like a person’s credit score, but the platform uses additional proprietary metrics that are more up to date, giving the process an advantage in gauging credit risk. Plus it is pretty easy to trump a 26% APR (from some credit card companies). While only targeting consumers today, lending to small businesses and entrepreneurs is on the list of things to do.
And what about the folks at PayPal? Levchin is challenging his old stomping grounds. In the report by CNBC, it states they reached out to PayPal but got the silent treatment.
Levchin must be doing something right as he has raised around $50 million in early stage funding to help get things going. See the video below.