Max Levchin, CEO of Affirm, touted the company’s new physical debt card offering on Friday, telling CNBC that it would offer customers similar benefits as credit cards, but with greater clarity upfront.
“It certainly shouldn’t be called a credit card, not even because it’s some kind of anti-credit card. I don’t want to be provocative,” Levchin told Closing Bell, criticizing what he sees as a lack of transparency in relation to credit card interest payments and late fees.
“Literally every one of these things is the exact opposite of Affirm’s card,” added Levchin. “You know exactly what you are going to pay. You know exactly what the payment schedule is and there will be no late fees under any circumstances. I think it is just the opposite in many ways. It serves the same purpose.” Purpose: You can pay for things now or over time. “
Affirm announced its debit card offering on Thursday, and the company expects to make the card generally available later in 2021. Affirm, which Levchin founded in 2012, offers so-called “buy now, pay later” services. It works with a number of merchants such as Peloton and offers customers POS loans that can be repaid in fixed monthly installments. The interest rates on the loans can vary between 0% and 30%, but Affirm does not charge compound interest.
Affirm has usually been associated with online purchases. Levchin told CNBC that the company’s debit card offering is a recognition of various customer preferences and the role offline purchases continue to play.
“I know our users, mostly Millennials and Gen Zers, love their debit cards. They love trading them offline, and the purpose of this product was to provide the ‘buy now, pay later’ functionality that they do really loved online – and also really offline with us, but never had in a map – to where they are. “
“The debit card form factor is a metaphor for everyday expenses. This is where we are trying to arrive,” added Levchin, co-founder of PayPal and former CEO of Yelp.
According to a press release, Affirm Card users can pay for a purchase in full from their bank account. The press release also says they can choose to pay in installments using what the company calls a “unique after-purchase feature”. Affirm says on its website that users can manage the purchases through its mobile app.
Affirm went public in mid-January, gaining 98% on the first day to close at $ 97.24. The stock ended Friday’s session at $ 93.06 below that level, equating to a market cap of approximately $ 24 billion. The shares traded up to $ 146.90 apiece in early February.
Prior to Affirm’s first deal in January, Levchin told CNBC that his “goal is to be a viable alternative to credit cards.”
Affirm, which ranked 23rd on CNBC Disruptor 50’s 2020 list, has been a beneficiary of the stay-at-home economy as more people shopped online and turned to their services. Levchin said Affirm’s debit card is well positioned to capitalize on as the economic reopening expands and shoppers spend money in different ways.
“There will be a lot of interesting challenges when the country reopens, but the dominant thread it will reopen will create a lot more opportunities for this product, which we have proven to be what our customers want and need,” Levchin said .