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Affirm’s Max Levchin, cofounder of PayPal, on the future of money after the coronavirus

May 10, 2020, 11:00 AM UTC

Max Levchin has a good track record at predicting the future of money and finance—most notably he cofounded PayPal in 1998, an era when credit card companies totally dominated the world of payments.

Today, Levchin appears to have made another successful bet with Affirm, a site that lets consumers arrange installment payments with online merchants ranging from Wal-Mart to Peloton. Since he founded the company in 2012, Levchin has seen Affirm’s user base triple every year, with the company counting 5.3 million customers as of May.

In an interview with Fortune, Levchin reflected how the pandemic will change shopping and payment habits. The most immediate effect, he says, will be a decline in the use of cash.

“People are going to start realizing cash is not just a bit dirty, but a potential viral transmitter,” he said. “On balance that’s a good thing because [a decline in cash usage] will bring more transactions into the light.”

Levchin also predicts the pandemic will lead the U.S. to broadly adopt the contactless forms of payment—waving phones or debit cards—that are prevalent in many other countries.

Unsurprisingly, Levchin is also bearish on the future of credit cards, and claims the economic crisis will cause Americans to become more disciplined about debt. Levchin thinks consumers will come to reject the card industry’s practice of encouraging them to pay a minimum amount every month—a habit that can lead people to owe money indefinitely.

While buying with Affirm likewise results in consumers taking on debt—typically with interest rates of 10 to 30%—Levchin says the installment process is superior to credit cards because it is transparent, and lets consumers know exactly when the debt will be retired.

As for the broader world of finance, Levchin predicts that mid-sized banks will be squeezed badly in the pandemic. In the long run, he says the crisis will benefit giants like JP Morgan as well as a host of digital-firstchallenger banks” like Chime.

“There’s the potential for a bonanza of customer acquitions for challenger banks where you don’t have to leave the house or touch anything but your phone. It’s not just cool, but safer as well,” he says.

As for his own finances, Levchin says he is enthusiastic about neither cryptocurrency nor gold—two assets that many see as valuable in a crisis. He owns no gold but adds he does own a small amount of Bitcoin he received years ago as payment in a deal.

And, perhaps surprisingly for a financial visionary, the division of labor in his own household does not include managing the family’s investments. “In the Levchin household, my wife does the investments. She’s done extraordinarily well,” he says.

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