Bank-issued credit cards are being loosened by fin-tech

The latest battleground between established banks and upstart financial technology companies is over who will finance consumers’ purchases at the moment they are made, online or in physical stores. For years, bank-issued credit cards have had a vice-like grip on the market. But their hold is being loosened by fin-tech start-ups using technology to revive the old model of retailer payment-by-instalment plans. The biggest start-up in point-of-sale financing is Affirm, founded by PayPal cofounder Max Levchin. It enables consumers on e-commerce sites or at store checkouts to set up monthly payment plans with fixed dollar amounts. Buyers pay an interest rate similar to most credit cards, but without compounding interest. Last year, Affirm’s transaction volume doubled for the second year in a row, hitting $2 billion, and last week it announced a nationwide partnership with retailer Walmart… Affirm does have a significant head start. Founded in 2012, transactions using its payment plans have doubled in each of the past two years. The Walmart deal puts Affirm into 4,000 US stores and on to Walmart’s website; it has already partnered with some 2,000 retailers and travel companies, from Warby Parker to Expedia. Its latest fundraising round, in late 2017, reportedly valued the company at nearly $2 billion.
 
Robert Armstrong

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