On the news that eBay is finally spinning off Paypal, the online payment facilitator’s founder, Max Levchin, is apparently not suffering from empty nest syndrome, but has been hard at work at his new project, Affirm. While Affirm is not exactly new, since it was released last year, it is new compared to Paypal. Levchin is, quite frankly, not enamored of credit cards, which explains his animus behind Paypal, and more recently, Affirm.
He told PYMNTS.com, “You have to have a credit card. You have to use it. You are going to get screwed, and you know it.” However, millenials don’t necessarily feel the a credit card is a necessary evil, and have been ditching plastic in droves. More than 6 out of 10 of them say they have never signed up for a credit card, and that number dramatically increased since the financial crisis of 2007.
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While some fear data gathering from social media as a “big brother” technique, it can be to the advantage of those who seek loans from Affirm, which has a more nuanced way of decided to whom to loan and at what rate than using black and white credit ratings. Affirm has identified 70, 000 personal qualities that characterize a a borrowers likelihood of paying back a loan. Levchin said this approach has been successful; “From the loans we’ve issued, I think we’ve had a literally 100 percent repayment rate from active duty servicemen.”