Max Levchin claims any single data point that seems to dramatically improve underwriting accuracy is a red herring. He argues these 'magic bullets' are brittle and fail when market conditions shift. A robust risk model instead relies on aggregating small lifts from many subtle factors.

Affirm offers a physical card that switches between debit and pre-approved credit. Instead of mass-advertising it, Affirm offers it exclusively to its existing, trusted user base. This deepens the relationship and drives retention without the high marketing spend of traditional cards.

Affirm's CEO suggests competitors don't report payment data to credit bureaus as a business strategy. By keeping delinquencies off the 'permanent record,' they can implicitly encourage late payments, from which they profit via fees. Affirm, having no late fees, advocates for full reporting.

Max Levchin's firsthand struggle with hidden fees and the long-term impact of a credit card mistake—even after his PayPal success—was the direct catalyst for founding Affirm. The goal was to build a transparent lending model born from personal pain.

By engineering your model so that the gross profit from a new customer in their first 30 days exceeds your acquisition cost (CAC), you can fund marketing on an interest-free credit card. The customer's own payment repays the debt before interest accrues, creating a self-funding growth loop.

Unlike other tech verticals, fintech platforms cannot claim neutrality and abdicate responsibility for risk. Providing robust consumer protections, like the chargeback process for credit cards, is essential for building the user trust required for mass adoption. Without that trust, there is no incentive for consumers to use the product.

The dramatic rise in BNPL usage across all demographics, including 41% of young shoppers, is a negative forward-looking indicator. While framed as innovation, it's a form of modern usury that reveals consumers cannot afford their purchases, creating a significant, under-discussed credit risk for the economy.

Merchants pay BNPL providers like Affirm more than credit card processors for three key benefits: converting hesitant buyers ('incremental sales'), ensuring high approval rates so the option is useful, and protecting their brand from association with lenders who charge punitive fees.

By eliminating late fees and compounding interest, Affirm removes any financial upside from borrower mistakes. This forces the company's business model to depend solely on successful repayment, demanding superior, transaction-by-transaction underwriting to survive.