Bringing Trust and Transparency to the Credit MarketFounded in 2013 by PayPal co-founder Max Levchin, Palantir co-founder Nathan Gettings, and Jeff Kaditz, Affirm's basic purpose was to give consumers an alternative to credit cards for their retail purchases - but there was a broader intent as well. "Max founded Affirm to address the overwhelming lack of trust people have in their banks and the fact that credit card usage had reached a historic low as a result of this distrust and uncertainty," Ra explained. "The FICO score was designed nearly 30 years ago, before universal Internet access or smart phones, and a system that allowed banks to monetize their customers' mistakes needed reinventing." It was an epic undertaking to be sure, but Affirm has delivered on its promise to "Build honest financial products that improve lives," Ra continued. "We're continuing to rebuild consumer finance from the ground up, tearing down the old financial system and replacing it with a model that is designed for the current century, prioritizes trust and transparency, and gives consumers access to friendlier financial products."
Use Affirm at Nearly 900 MerchantsShopping with Affirm begins with a straightforward account creation process. You must be 18 years old (19 if in Alabama), have a phone registered in your name, and provide info including your date of birth and the last four digits of your Social Security number for identity verification. "Shoppers provide a few basic, top-of-mind pieces of information and receive a real-time credit decision," Ra said. "Our modern underwriting does the rest, looking at a variety of data sources beyond the FICO score to make a holistic and accurate credit decision. We focus on a consumer's ability and intent to pay above all else, so we can extend credit to many of those overlooked by traditional credit scoring, like millennials or others with limited credit history." Once you're approved, visit one of Affirm's nearly 900 online merchant partners - including retailers offering furniture and home goods, electronics, music, sporting goods, automotive, apparel and accessories — and add any items you wish to purchase to your shopping cart. Featured merchants include popular companies such as Wayfair, Casper, Expedia, Peloton, Joybird and Motorola.
"Consumers who select Affirm at checkout are given the flexibility to buy now and pay for their purchase over three, six or 12 months - whichever best meets their budget," Ra said. "We show shoppers exactly how much their total costs will be upfront, eliminating credit's inherent uncertainty. And we've eliminated hidden fees and compounding interest as well, so customers will never pay a penny more than the amount shown." The APR - or annual percentage rate - you'll pay on each purchase ranges from 10 percent to 30 percent depending on your creditworthiness. Some merchants may offer zero percent APR on qualified purchases. And you'll never pay a late fee, service fee or prepayment fee. "Our lack of fees and absence of compounding interest is in stark contrast to traditional credit products that profit from customers' mistakes," Ra said. "They are typically using Affirm to buy larger ticket items including furniture, sporting goods, exercise equipment, travel and electronics. We see a pretty even distribution in terms of age, ranging from younger consumers whose credit histories are perhaps more limited, to those with more established credit, who might use Affirm as a means to smooth out their cash flow and bring some predictability into their budget."
The financing model has been quite popular, and Ra noted that in 2016, Affirm lent hundreds of millions of dollars, more than tripling its 2015 loan volume. They also have plans to expand their product offerings down the road. "We want to directly address more consumer wants and needs," she concluded. "We have a few products in the works to drive this goal forward that we're very excited about."