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Affirm, the buy now, pay later fintech, just made its public markets debut. 

The fintech, which offers no-fee installment loans for online shoppers, raised $1.2 billion in its initial public offering, issuing 24.6 million shares priced at $49 per share. 

Consistent with recent tech IPOs like DoorDash and AirBnb, Affirm’s share price surged as much as 110% above its opening price in initial hours of trading. 

With its public debut under its belt, Affirm CEO and founder Max Levchin spoke to Insider on Wednesday about his plans for transforming the credit industry.

Levchin said Amex is a ‘North Star’ in the credit space

With the rise of fintechs pushing transparency and offering low- or no-fee financial products, consumers’ attitudes toward credit have shifted. But that doesn’t mean credit cards are going away anytime soon. 

In fact, Levchin pointed to American Express as an inspirational player in financial services.

“Amex, of all the financial services brands, is in many ways a North Star of how to comport yourself and how to be,” Levchin told Insider Wednesday. “They’ve done a fantastic job standing for something.”

See more: Affirm is a breakout star of the buy now, pay later craze. Here’s why increased competition and fee pressure still pose significant threats for the fintech looking to go public with a $10 billion valuation.

During the coronavirus pandemic, Amex (along with many other financial services companies) waived interest and late fees for customers facing financial difficulties. And the card giant has been a vocal supporter of small businesses, pushing its Shop Small initiative and offering customers rewards for shopping locally.

Levchin — of PayPal Mafia fame —  has been vocal about his mission of honest finance. He founded Affirm as an alternative to credit cards.

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Credit cards “failed to keep up with the evolving world,” Levchin said in his opening letter in Affirm’s S-1 filing.

“One could argue cards have devolved, even become corrupted. The barely-readable fine print makes only one thing clear to consumers: You’ll never know exactly what your purchase will really cost you,” Levchin wrote.

Traditional players still need to evolve, Levchin said

And while Amex will serve as a guide to how Affirm can navigate the public markets, that’s not to say established players don’t need to update their offerings.

Levchin said Wednesday that credit-card companies like Amex, Citi, and Chase aren’t necessarily in danger — but some of their products are.

Affirm doesn’t charge late fees, and Levchin is one of many in the fintech space that rails against things like deferred interest. Lenders may offer a 0% interest loan, but if it’s not paid back within a specific timeframe, the borrower could be charged interest retroactively. 

“They shouldn’t be offering the products they do,” Levchin said. “I think the market is shifting away from them.” 

The banks behind deferred interest credit cards shouldn’t be worried about Affirm, Levchin added. But they should worry about consumers opting for other options, like Affirm.

“It’s not the players,” Levchin said. “It’s the …read more

Source:: Business Insider

      

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