13 ms·

Levchin Launches New Payments Startup, Affirm

95 points by jamesjyu 14y ago

rdl 14y ago
This looks interesting. I guess they're going through all of this trouble in "digital credit checking" because they don't assume everyone has a credit card? There's probably a market for a very low friction payment system for high margin goods (e.g. virtual goods, or subscriptions), similar to just doing net terms, for individuals, online. Something where as long as you can guarantee an individual only has one account, you're willing to extend a certain amount of credit per user (not per transaction).
- mericsson 14y ago
  Even assuming everyone has a credit card, entering a credit card on a mobile phone is enough friction to cause the potential consumer to postpone or never make the purchase. It seems like Affirm would solve that problem.
  - deleted 14y ago
    [deleted]
  - rdl 14y ago
    I'd rather just put my amex into my iphone once (oh, wait, done already) and let Apple handle it. It would probably work IFF Apple and Android/Google both have a relatively compatible solution (from the merchant perspective).
    - ceslami 14y ago
      What do you mean by "put my Amex into my phone once...and let apple handle it"? Is this a component of Passbook or something?
      - rdl 14y ago
        I mean in iTunes, and just buy stuff via iTunes. There are obviously many serious problems with that. (Apple's policies, 30% cut, etc.) In practice what I do is just buy things from Amazon, whether it is on my phone or laptop, so the critical thing is being logged in to amazon.com.
- deleted 14y ago
  [deleted]
- strlen 14y ago
  Teens are an example of a group that has mobile phones and doesn't have credit cards (or bank debit cards) and there are other examples. There is also a group that has bank cards, secured credit cards (i.e., requires up-front payment), but doesn't have any means of credit/lay-away-payment available to them that is as easy as a credit card. Plenty of CPA ads relied on users clicking through to make a purchase using their phone (being billed for what they've purchased). Finding a way to make this purchasing scheme more legitimate (explicitly warn the users that, yes, they will have to pay one way or another) would be the next logical step.
sriramk 14y ago
This is a very interesting take on what Klarna has done in Europe. Since there is such high friction to completing a transaction on mobile (pulling out your credit card number, entering it on a smartphone keyboard, etc), anything that makes the checkout process easier is going to be very valuable.
nayefc 14y ago
Credit cards, Square and now Affirm. Yet another way to spend all your money without really keeping track of where it goes. :-) But seriously, looks promising. Really hope someone would crack the mobile payments market.
mamcx 14y ago
I wish somebody "solve" the problem of payments for people NOT in USA. That is something that seriously require solution.
- niggler 14y ago
  This will eventually be solved by a bunch of people building solutions in different countries and one firm sweeping through and buying up the startups
  - deleted 14y ago
    [deleted]
- jere 14y ago
  That's interesting. I went to a presentation last year where the presenter (I believe she was from paypal) was saying that the US was many years behind several other countries on payment methods, especially SMS.
  - kerryfalk 14y ago
    Payment methods available to consumers via banks. Yes, other countries are farther ahead. Online commerce is a different story where the US is far ahead of the rest of the world.
- barber5 14y ago
  This _IS_ a solution for payments outside the USA. Do you know how many countries with a rapidly growing middle class that Visa, MasterCard, etc won't touch because their crappy credit models can't deal with these people? This is a game changer that allows people who haven't been able to buy online to do so..
dm8 14y ago
Promising. Entering credit card information is pain, particularly on touch devices. Is Google Wallet their main competitor?
chetanahuja 14y ago
Facebook as social proof (of creditworthiness !!) ? I somehow don't buy <no pun> it.
- rdl 14y ago
  I wouldn't be willing to delete my FB profile and start over for $50. If you tie a purchase to that profile, so I might be able to scam you for $50 once per "real" FB profile sometimes, that's acceptable. What's not acceptable is letting a Russian organization scam you for N x $50 where N is as many random email addresses as they can generate. Similarly, I'm not going to throw away my iPhone for $50. If there were a way to strongly tie an account to a physical iPhone, with no more than 1 account per iPhone, that solves a lot of problems. Then your only problem is if I make a piece of malware which goes to everyone else's iPhone, opens an account, and then somehow sends me the benefits.
  - chetanahuja 14y ago
    Then your only problem is if I make a piece of malware... Yes. Only the little problem of malware spread in the form of software on eternally connected devices.
par 14y ago
looking forward to see how this pans out.
brackin 14y ago
Levchin has money in most of the major payments startups so it's interesting to see him launch his own venture. I like the idea but the current site/demo doesn't really feel like the right execution. I suppose I should get to know it before making a decision.
Cherian_Abraham 14y ago
I have my reservations about the viability of a Klarna type approach in the US - where there is a high level of credit card penetration among the US customers. Since Affirm will require customers to choose that as a payment option, over other funding sources - Paypal, CC and others, there has to be a compelling reason for a customer to choose Affirm. And atleast in the US, where we are card-entrenched, and everyday we make it easier for customers to use their plastic - it's a tough value proposition for Affirm.
- rohamg 14y ago
  Affirm saves the user from entering cc info on mobile - a pain for many reasons. Just like PayPal on web.
  - Cherian_Abraham 14y ago
    Except that wasn't why Paypal became what it is today. The P2P aspect and sufficiently protecting the customer during early days of e-commerce is why Paypal became so big. Removing the need to enter the full credit card info - was a nice to have - and secondary, once use of Paypal became more ubiquitous. Infact, Affirm would have to hope that customers will use anything other than credit cards to settle with Affirm - because it will be cost prohibitive for them to do that. They would have to find ways to justify the customer settling via ACH. Too little, too late imho.
ig1 14y ago
Most of the replies here are a great example of a filter bubble. Living in San Francisco or New York you just assume everyone has a credit card. Not so. A quarter of US households are unbanked or underbanked and primarily rely upon cash for payments. That's why Walmart introduced shop online and pay in person. Only 15% of Walmart's in-store customers pay via card, from surveys they found that two-thirds of their online customers would prefer to pay in cash.
- jurassic 14y ago
  Do you have a source for that? I'd be interested in reading more about it. I never would have guessed credit transactions would be that low at Walmart; I grew up in a poor, "redneck" area and knew a lot of people (my family included) that depended on the "float" you get with a credit card to give a little flexibility over their normal paycheck-to-paycheck existence. But I'd believe the data, if it exists for public consumption.
  - 18pfsmt 14y ago
    I'm curious what searches have you done to find such data. Companies like Netspend (just acquired this week by TSYS) and Greendot exist almost exclusively to serve this market. American Express has their own offering called Bluebird card to compete in the same market. There are lots of articles discussing these companies and the target market of the "unbanked" when looking for info on these public companies. The only reason I hesitate to post links to specifics is because I'd rather not taint your approach to finding such information, but it is pretty easy to find, if you are to search.
- hkmurakami 14y ago
  That's actually quite interesting. It reminds me that Japan as a whole has very low credit card penetration as well, and the primary mode of transaction is cash, even for items costing hundreds of dollars (or tens of thousands of yen, to be precise). Use of 10,000 yen bills (~$100) is routine. People still have latent mistrust for handing over credit card information online. Virtually all courier services have a "pay upon arrival" option which allows you to pay for the cost of the item + the shipping when you receive the item. The courier then pays the retailer for the item cost. edit: It may also have to do with the fact that the financial services industry there is even more sales driven and more scammy than its U.S. counterpart, and hence the public has a mistrust for all financial "products" that are anything other than super conservative.
jusben1369 14y ago
At Spreedly we support 45 + payment gateways and naturally one of those is PayPal. One thing PayPal has pushed really hard in the last 12 months to us as a "partner" is "BillmeLater" So I'm trying to work out what part this is about ease of payment (feels like digital wallets will get there soon too) and how much this is about the fact you don't have to pay for 30 days (PayPal seems enthralled with it) Maybe it's both? Anyway there's always room for more innovation.
kefs 14y ago
https://www.affirm.com/u/ https://www.affirm.com/u/ > Sign up with Facebook to buy online securely. Really? The only signup option is via Facebook? Noooo thank you.
- EScott11 14y ago
  The entire point is that Affirm looks at data from your social network(s) to establish an alternative metric for credibility.
hvfpanda 14y ago
We're always looking for talented engineers with an unhealthy obsession for solving hard problems. If you're interested in joining Affirm or want to show us your programming skillz...how would you solve this? https://affirm.com/jobs https://affirm.com/jobs

95 points by jamesjyu 14y ago

rdl 14y ago

This looks interesting. I guess they're going through all of this trouble in "digital credit checking" because they don't assume everyone has a credit card? There's probably a market for a very low friction payment system for high margin goods (e.g. virtual goods, or subscriptions), similar to just doing net terms, for individuals, online. Something where as long as you can guarantee an individual only has one account, you're willing to extend a certain amount of credit per user (not per transaction).

mericsson 14y ago
Even assuming everyone has a credit card, entering a credit card on a mobile phone is enough friction to cause the potential consumer to postpone or never make the purchase. It seems like Affirm would solve that problem.
- deleted 14y ago
  [deleted]
- rdl 14y ago
  I'd rather just put my amex into my iphone once (oh, wait, done already) and let Apple handle it. It would probably work IFF Apple and Android/Google both have a relatively compatible solution (from the merchant perspective).
  - ceslami 14y ago
    What do you mean by "put my Amex into my phone once...and let apple handle it"? Is this a component of Passbook or something?
    - rdl 14y ago
      I mean in iTunes, and just buy stuff via iTunes. There are obviously many serious problems with that. (Apple's policies, 30% cut, etc.) In practice what I do is just buy things from Amazon, whether it is on my phone or laptop, so the critical thing is being logged in to amazon.com.
deleted 14y ago
[deleted]
strlen 14y ago
Teens are an example of a group that has mobile phones and doesn't have credit cards (or bank debit cards) and there are other examples. There is also a group that has bank cards, secured credit cards (i.e., requires up-front payment), but doesn't have any means of credit/lay-away-payment available to them that is as easy as a credit card. Plenty of CPA ads relied on users clicking through to make a purchase using their phone (being billed for what they've purchased). Finding a way to make this purchasing scheme more legitimate (explicitly warn the users that, yes, they will have to pay one way or another) would be the next logical step.

sriramk 14y ago

This is a very interesting take on what Klarna has done in Europe. Since there is such high friction to completing a transaction on mobile (pulling out your credit card number, entering it on a smartphone keyboard, etc), anything that makes the checkout process easier is going to be very valuable.

nayefc 14y ago

Credit cards, Square and now Affirm. Yet another way to spend all your money without really keeping track of where it goes. :-) But seriously, looks promising. Really hope someone would crack the mobile payments market.

mamcx 14y ago

I wish somebody "solve" the problem of payments for people NOT in USA. That is something that seriously require solution.

niggler 14y ago
This will eventually be solved by a bunch of people building solutions in different countries and one firm sweeping through and buying up the startups
- deleted 14y ago
  [deleted]
jere 14y ago
That's interesting. I went to a presentation last year where the presenter (I believe she was from paypal) was saying that the US was many years behind several other countries on payment methods, especially SMS.
- kerryfalk 14y ago
  Payment methods available to consumers via banks. Yes, other countries are farther ahead. Online commerce is a different story where the US is far ahead of the rest of the world.
barber5 14y ago
This _IS_ a solution for payments outside the USA. Do you know how many countries with a rapidly growing middle class that Visa, MasterCard, etc won't touch because their crappy credit models can't deal with these people? This is a game changer that allows people who haven't been able to buy online to do so..

dm8 14y ago

Promising. Entering credit card information is pain, particularly on touch devices. Is Google Wallet their main competitor?

chetanahuja 14y ago

Facebook as social proof (of creditworthiness !!) ? I somehow don't buy <no pun> it.

rdl 14y ago
I wouldn't be willing to delete my FB profile and start over for $50. If you tie a purchase to that profile, so I might be able to scam you for $50 once per "real" FB profile sometimes, that's acceptable. What's not acceptable is letting a Russian organization scam you for N x $50 where N is as many random email addresses as they can generate. Similarly, I'm not going to throw away my iPhone for $50. If there were a way to strongly tie an account to a physical iPhone, with no more than 1 account per iPhone, that solves a lot of problems. Then your only problem is if I make a piece of malware which goes to everyone else's iPhone, opens an account, and then somehow sends me the benefits.
- chetanahuja 14y ago
  Then your only problem is if I make a piece of malware... Yes. Only the little problem of malware spread in the form of software on eternally connected devices.

par 14y ago

looking forward to see how this pans out.

brackin 14y ago

Levchin has money in most of the major payments startups so it's interesting to see him launch his own venture. I like the idea but the current site/demo doesn't really feel like the right execution. I suppose I should get to know it before making a decision.

Cherian_Abraham 14y ago

I have my reservations about the viability of a Klarna type approach in the US - where there is a high level of credit card penetration among the US customers. Since Affirm will require customers to choose that as a payment option, over other funding sources - Paypal, CC and others, there has to be a compelling reason for a customer to choose Affirm. And atleast in the US, where we are card-entrenched, and everyday we make it easier for customers to use their plastic - it's a tough value proposition for Affirm.

rohamg 14y ago
Affirm saves the user from entering cc info on mobile - a pain for many reasons. Just like PayPal on web.
- Cherian_Abraham 14y ago
  Except that wasn't why Paypal became what it is today. The P2P aspect and sufficiently protecting the customer during early days of e-commerce is why Paypal became so big. Removing the need to enter the full credit card info - was a nice to have - and secondary, once use of Paypal became more ubiquitous. Infact, Affirm would have to hope that customers will use anything other than credit cards to settle with Affirm - because it will be cost prohibitive for them to do that. They would have to find ways to justify the customer settling via ACH. Too little, too late imho.

ig1 14y ago

Most of the replies here are a great example of a filter bubble. Living in San Francisco or New York you just assume everyone has a credit card. Not so. A quarter of US households are unbanked or underbanked and primarily rely upon cash for payments. That's why Walmart introduced shop online and pay in person. Only 15% of Walmart's in-store customers pay via card, from surveys they found that two-thirds of their online customers would prefer to pay in cash.

jurassic 14y ago
Do you have a source for that? I'd be interested in reading more about it. I never would have guessed credit transactions would be that low at Walmart; I grew up in a poor, "redneck" area and knew a lot of people (my family included) that depended on the "float" you get with a credit card to give a little flexibility over their normal paycheck-to-paycheck existence. But I'd believe the data, if it exists for public consumption.
- 18pfsmt 14y ago
  I'm curious what searches have you done to find such data. Companies like Netspend (just acquired this week by TSYS) and Greendot exist almost exclusively to serve this market. American Express has their own offering called Bluebird card to compete in the same market. There are lots of articles discussing these companies and the target market of the "unbanked" when looking for info on these public companies. The only reason I hesitate to post links to specifics is because I'd rather not taint your approach to finding such information, but it is pretty easy to find, if you are to search.
hkmurakami 14y ago
That's actually quite interesting. It reminds me that Japan as a whole has very low credit card penetration as well, and the primary mode of transaction is cash, even for items costing hundreds of dollars (or tens of thousands of yen, to be precise). Use of 10,000 yen bills (~$100) is routine. People still have latent mistrust for handing over credit card information online. Virtually all courier services have a "pay upon arrival" option which allows you to pay for the cost of the item + the shipping when you receive the item. The courier then pays the retailer for the item cost. edit: It may also have to do with the fact that the financial services industry there is even more sales driven and more scammy than its U.S. counterpart, and hence the public has a mistrust for all financial "products" that are anything other than super conservative.

jusben1369 14y ago

At Spreedly we support 45 + payment gateways and naturally one of those is PayPal. One thing PayPal has pushed really hard in the last 12 months to us as a "partner" is "BillmeLater" So I'm trying to work out what part this is about ease of payment (feels like digital wallets will get there soon too) and how much this is about the fact you don't have to pay for 30 days (PayPal seems enthralled with it) Maybe it's both? Anyway there's always room for more innovation.

kefs 14y ago

https://www.affirm.com/u/ https://www.affirm.com/u/ > Sign up with Facebook to buy online securely. Really? The only signup option is via Facebook? Noooo thank you.

EScott11 14y ago
The entire point is that Affirm looks at data from your social network(s) to establish an alternative metric for credibility.

hvfpanda 14y ago

We're always looking for talented engineers with an unhealthy obsession for solving hard problems. If you're interested in joining Affirm or want to show us your programming skillz...how would you solve this? https://affirm.com/jobs https://affirm.com/jobs