Affirm and Max Levchin: No Late Fees, 3 a.m. Data and a Bank Charter Bid

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Affirm was founded in 2012 out of the HVF startup studio, led by PayPal co-founder Max Levchin, who became CEO, with Nathan Gettings, Jeffrey Kaditz and Alex Rampel. Its premise was an anti-credit card: unsecured installment loans at checkout with no late fees and no compound interest, so the interest agreed at purchase is the most a customer will owe. To make that work, Affirm used machine learning on real-time context, such as the time of day of a purchase, to judge risk and fraud, and reported higher approval rates than legacy lenders. By 2016 merchants on Shopify, Magento and BigCommerce could switch on Affirm at checkout, followed by deals with Walmart in 2019, Amazon, Target and Apple.

Affirm earns consumer APRs from zero to 36 percent and merchant commissions of up to 12.5 percent, which retailers pay because installment options cut cart abandonment and raise order values. Its January 2021 IPO raised $1.2 billion. Rising rates from 2022 made its securitized loan bundles costlier to sell, and in early 2023 it cut 19 percent of staff and closed its crypto unit. The CFPB opened inquiries into buy now, pay later lending and in May 2024 applied Truth in Lending Act rules to the sector. In 2026 Levchin applied in Nevada for an industrial loan company charter to form Affirm Bank.

• In 2023 Affirm partnered with FICO on a credit scoring model built for installment loans.
• Apple shut down its own pay-later service after about a year and embedded Affirm in Apple Pay.
• In early 2025 Affirm lost its exclusive Walmart checkout spot to Klarna.
• The Affirm Card lets users convert purchases between $100 and $1,000 into installment loans within 24 hours.
• By 2026 Affirm had nearly 28 million active consumers, over $50 billion in annual payments, and a pilot to split rent into two interest-free payments.