Millennials scared of running up credit card debt in the face of crushing student loans now have another option: Affirm. The San Francisco-based fintech launched by former PayPal CTO Max Levchin offers consumers (millennials and others) a buy-now-pay-over-time alternative to traditional credit cards. Affirm uses proprietary algorithms at the point of sale to determine a person’s creditworthiness. This is especially useful for folks who don’t have an extensive credit history yet. If approved, borrowers can select a three-, six- or 12-month repayment period, with the monthly interest expressed in dollars, not as an interest rate. There is no compounding interest or late fees.
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In February the company announced that its financing options would be available in more than 4,000 Walmart Supercenters in the U.S. and would roll out to Walmart.com as well. Customers can check their eligibility for an Affirm loan online before visiting a store and get a decision in real time. Once approved, the customer gets a barcode that can be used at checkout for purchases ranging from $150 to $2,000. Affirm is available at 2,000 other merchants, including Warby Parker, Wayfair, The Real Real and Expedia. It says its loan volume in 2018 reached $2 billion.
In April the company announced that it spun out a new company, called Resolve, that offers the same buy-now-pay-over-time options for business purchases. Like Affirm, Resolve analyzes applications using non-traditional underwriting data. It offers net 30, 60 and 90-day terms and assumes all repayment risk. Suppliers receive full payment minus fees as soon as an order is placed.
The company has raised $1 billion since launching in 2012, including a $300 million round led by Thrive Capital in April. Other investors include Ashton Kutcher and Sound Ventures.