Max Levchin, co-founder of online payment giant PayPal, launched a rival business on Tuesday called Affirm that will compete in the crowded but fast-growing mobile payments business.<\/p>\n
Affirm’s technology helps shoppers complete online purchases more quickly and easily when they are using smart phones and other mobile devices, according to the firm’s website.<\/p>\n
PayPal, owned by eBay Inc, is the leader in online payments, however, the company is being challenged by a host of start-ups, including Square Inc, that focus on new opportunities and problems created by the boom in mobile commerce.<\/p>\n
Affirm is focusing on streamlining the mobile checkout process online, which can involve typing in lots of information, such as an address and card numbers, using a small type pad.<\/p>\n
Affirm said it has whittled the online buying process down to two taps on a smart phone screen – one to tap the Affirm button on participating merchant websites and a second to confirm the order.<\/p>\n
Affirm is using Facebook Inc to confirm users’ identities, so for first-time users the process includes a third step which involves logging into their Facebook accounts and accepting the Affirm application.<\/p>\n
Levchin co-founded PayPal with Peter Thiel and was its Chief Technology Officer for four years, before it was acquired by eBay. He designed and built PayPal’s pioneering online security and fraud-prevention systems.<\/p>\n
While PayPal led the way on security, its service has been criticized as not very user-friendly. That has left room for new rivals to develop more consumer-focused payment services.<\/p>\n
“This is a very big market therefore it’s extremely attractive for a lot of players,” Bob Swan, chief financial officer of eBay, said during a presentation to investors on Tuesday.<\/p>\n
As more consumers shop using mobile devices, it is very important for PayPal to have a fast mobile checkout service that is “brain-dead simple,” Swan added.<\/p>\n
Affirm said it gives users 30 days to pay for their purchases, comparing the service to a charge card. It makes money by charging participating merchants a small fee.<\/p>\n
However, if users do not pay their balance, Affirm can charge “reasonable” fees on delinquent accounts, according to the company’s terms of service.<\/p>\n
Affirm users can pay off their balances using credit cards, bank transfers or physical checks. PayPal was not included as a method of payment in its terms of service.<\/p>\n
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