Max Levchin was one of the founders of PayPal, sold his second company to Google (GOOG) for $200 million and has invested in some of Silicon Valley's most notable startups, from Pinterest to IronPort to Yelp.
Now he's unveiled Affirm, a mobile payments company that Levchin said will try to fill the gaps left by others -- including PayPal, which he helped get off the ground as a 23-year-old in 1998.
Affirm hopes to tackle shopping cart abandonment -- the phenomenon of a shopper trolling through a website, putting items into a cart, then bailing out when presented with a lengthy checkout process that demands the user's name, address and credit card number.
And, Levchin said, "The cart abandonment rate is typically three to four times higher for mobile than desktop."
He uses the example of a commuter on a crosstown bus suddenly remembering he needs to order more contact lenses; with one hand holding the phone and another holding a hand rail, there's no way to fish out a credit card.
Enter Affirm, which will pay the merchant for you.
If the mobile site you're using has partnered with Levchin's startup, the user might see a "Pay with Affirm" button. Click that, and you're asked to log into Affirm using your Facebook or other social network account. Affirm takes a cut of the transaction and sends you an invoice.
"In the past," Levchin said, "if you lived in a town where the shopkeeper recognized you, you'd say, "I don't have my wallet today, but put it on my tab and I'll pay you at the end of the month.' The idea was a lubricant for commerce."
Just like that old-time shopkeeper, though, Affirm won't extend credit to just anybody. The company crunches information from your Facebook profile, your shopping activity on the e-tailer's site and other data into an algorithm that instantly decides how creditworthy you are. (If the answer's 'not very,' you don't see the Affirm button on the merchant's site.)
Affirm users can pay their invoices with a bank draft or credit card, and to process those card payments, Levchin has partnered with another white-hot payments startup, San Francisco-based Stripe. The company is funded by a Silicon Valley who's-who -- including Levchin.
"He's determined, intellectually rigorous, and (like a lot of the PayPal folks) almost implausibly ambitious," said Stripe co-founder and CEO Patrick Collison, a boy wonder from the Levchin mold who launched his company at age 22.
To be sure, others are racing to offer mobile shoppers an alternative to re-entering their personal and financial data time after time. One competitor questions whether Affirm can gain traction.
"Arguably, this is exactly what PayPal does today, with the difference that PayPal requires more than two clicks," said Marc Barach, chief marketing officer of Jumio, a Palo Alto company that's also trying to solve the cart-abandonment conundrum.
His startup, whose board includes Facebook co-founder Eduardo Saverin and ex-IronPort CEO Scott Weiss, takes a different approach: Rather than typing in credit card information, a user scans a photo of his or her credit card using a smartphone camera.
Levchin, however, said feelers from prospective customers have been "somewhere between 'lots' and 'a deluge'" since he took Affirm out of stealth mode late last month.
Affirm has already lined up florist giant 1-800-FLOWERS as its test customer. And Levchin said he's deep in conversations with hundreds of websites in the United States and elsewhere.
Contact Peter Delevett at 408-271-3638. Follow him at Twitter.com/mercwiretap.
Headquarters: San Francisco
Brainchild of: Max Levchin, who cofounded PayPal and later sold social app-maker Slide to Google
What it does: Allows credit-worthy Internet shoppers to skip lengthy checkouts; Affirm pays online retailers on their behalf, then sends a bill.