'Affirm' is PayPal cofounder Max Levchin's second take on online commerce — and it just raised $45M

Max Levchin, who put his name on the map as a cofounder of PayPal, is turning his attention to new payments startup Affirm.

Today, Affirm announced that it secured $45 million in funding and have already grown to a team of 32 employees, which includes Palantir cofounder Nathan Gettings.

So what is Affirm and how is it different from Levchin’s last gig? Well, the start up is basically a new take on online credit — sort of a credit card killer when it comes to online shopping. Shoppers pay with Affirm during the checkout process at retail stores, then pay off what they owe Affirm using debit cards, credit cards, bank transfers, or checks.

While this is an extra step when paying for things, the advantage of using Affirm is that it’s more flexible and convenient than traditional credit cards — meaning you can purchase things with Affirm that you normally more flexible and convenient than normal credit cards so you can purchase things you might not normally be able to do based on a limited line of credit or cash available in your accounts.

Unlike the traditional credit assessment process that uses FICO scores, Affirm uses a variety of personal data points to determine interest rates and how much credit to offer a person. So if you think credit scores are unfair, Affirm is for you.

When it comes to retailers, one of Affirm’s biggest selling points is that it can help them bring in more revenue — as the more convenient credit line Affirm offers their customers should lead to bigger purchases.

For example, Beautylish cofounded Nils Johnson told the Wall Street Journal that Beautylish customers who use Affirm have indeed been making larger purchases and come back to shop more often.

“Welcoming a customer and providing the option to pay later returns to the way commerce used to be conducted,” Johnson told the Journal in an email. “A tradition based on trust, relationship and community which doesn’t judge you based on traditional credit scoring. It’s more akin to running a tab at the local store.”

Along with Beautylish, other retailers like Faraday and Twice have also been using Affirm as an additional payment option available to customers.

Interestingly, Affirm states on its website that there is “zero fraud” through its service. That claim is quite bold considering how vulnerable online payments startups are to fraud.

Levchin also to the Journal that he is talking to investors about raising further capital to eventually be able to not only offer other kinds of loans, but also open it up to small businesses — something Square started doing with its recently announced Square Capital program.

Khosla Ventures, Lightspeed Venture Partners and Nyca Partners participated in this funding round.

Affirm is the second startup to come out of Levchin’s incubator, HVF, following fertility-monitory app Glow.