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Lending company Affirm takes on bricks and mortar shopping

<h1>28. Max Levchin (TIE)</h1>
The tech world knows this list returnee as a founder of PayPal and Slide, but now Levchin has launched Glow, one of the Valley's first fertility apps. Levchin is also keeping busy on the boards of Yelp and Yahoo.<h1>28. Max Levchin (TIE)</h1>
The tech world knows this list returnee as a founder of PayPal and Slide, but now Levchin has launched Glow, one of the Valley's first fertility apps. Levchin is also keeping busy on the boards of Yelp and Yahoo.
<h1>28. Max Levchin (TIE)</h1> The tech world knows this list returnee as a founder of PayPal and Slide, but now Levchin has launched Glow, one of the Valley's first fertility apps. Levchin is also keeping busy on the boards of Yelp and Yahoo.Photo: David Paul Morris/Getty

Affirm, PayPal co-founder Max Levchin’s consumer lending startup, is bringing its instant loans for shoppers to brick-and-mortar stores.

Affirm set out to rethink how consumers, especially millennials, borrow money. Instead of using a credit card, Affirm lets borrowers take out a microloan (typically a few hundred dollars per transaction) at the point of sale to finance a purchase. The company uses a variety of data about the borrowers, including non-traditional criteria like social media presence, to determine creditworthiness. The terms of the loan, including interest rates which are typically between 6% and 30%, are clearly indicated upfront so there are no surprises for the borrower down the line. The goal is to serve consumers who might not otherwise have access to credit based on traditional credit scores like FICO.

Since debuting last year, Affirm has only been available to online retailers who signed on individually. Then in August, it teamed with e-commerce software provider Shopify to bring in more customers.

Now, with the holiday season fast approaching, Affirm is setting its sights on brick-and-mortar stores through a partnership with Clover, a point of sale system owned by First Data (FDC). Clover’s point-of-sale product, a modern day cash register, lets merchants easily turn on Affirm’s service with a few taps on the tablet-like device. Customers can sign up for and apply for a loan from the mobile app.

“Obviously the majority of retail is offline so we’ve been building our product to do that,” Brad Selby, Affirm’s vice president of merchant services, told Fortune.

The company plans to partner with additional providers of point-of-sale products, he added.

Another new way shoppers can use Affirm loans is through one-time credit card-like numbers. The company can issue shoppers a number that can be entered like a credit card by merchants that have neither Affirm’s system or a Clover register. The catch, however, is that shoppers must declare the specific purchase they want to make, and the merchant has to be loosely partnered with Affirm so that some data can be exchanged. It’s therefore not entirely flexible.

Affirm is also expanding a pilot it has operated for the past few months that lets salespeople issue Affirm loans over the phone. The process is fairly simple: during the call, the salesperson inputs basic information about the customer, such as their name, phone number, and email. The customer then receivers a web link via email or SMS through which they can then complete the transaction. According to Selby, companies in the pilot have expressed positive feedback about this financing option. So far, about a dozen companies, including 3D printer seller MakerBot and smartphone repair service iCracked, have been using this, with another dozen waiting to receive access.

“Being able to originate a loan through the phone is a really powerful thing,” Selby said.

Up next, the company is working to make its service more widely available through NFC payment terminals, Selby revealed.

Founded in 2012 by Levchin, Jeff Kaditz, and Nathan Gettings, Affirm has raised $320 in funding so far, including a monster $275 million round of debt and equity financing this past spring.

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