An Upstart Threatens Big Banks’ High-Rate Credit Card Business

Max Levchin doesn’t think you should be buying a pumpkin spice latte on a credit card and paying it off over the next decade. That could be an elevator pitch for his company, Affirm Holdings Inc., one of the key participants in the world of buy-now, pay- later finance.

The industry promises an alternative to high-interest credit cards, which its leaders generally revile for their tendency to get some customers in debt for, well, forever. In the classic buy-now, pay-later arrangement, a customer instead purchases, say, a $500 TV in four $125 installments. It’s a zero-interest loan, unless ...