PayPal Co-Founder's Newest Startup Raises $100 Million to Reinvent CreditAffirm is rethinking the way shoppers -- particularly millennials -- borrow money by letting them obtain a micro-loan at a point of sale instead of using a credit card.

Max Levchin knows a thing or two about payments and credit cards. He's the co-founder of PayPal, which pioneered how people pay when shopping online.

With his newest startup, Affirm, Levchin is on a mission to reinvent the way people get loans. In particular, Affirm is rethinking the way shoppers -- particularly millennials -- borrow money by letting them obtain a micro-loan at a point of sale instead of using a credit card.

Investors have been pouring money into Levchin's new brainchild in the hope that Affirm can do for debt what PayPal did for the digital wallet. On Wednesday, the company announced $100 million in new funding led by new investor Founders Fund, with existing investors Lightspeed Venture Partners, Spark Capital, Khosla Ventures, Andreessen Horowitz and Jefferies participating. This brings Affirm's total funding to $425 million.

It's worth noting that Peter Thiel, the former CEO of PayPal and a former colleague of Levchin's, is the founder of Founders Fund.

Affirm's service, Buy with Affirm, lets online shoppers pay for purchases in multiple monthly installments. To apply, consumers submit their name, mobile phone number, birthday, and last four digits of their Social Security number. In measuring risk, Affirm takes into account data from sources such as bank accounts to determine how much cash a borrower has and how frequent they are collecting pay checks.

Affirm said that the number of merchants using its service has grown from 100 to 700 in the past year. They include TheRealReal, fashion retailer BCBG, flash sales site One King's Lane and mattress startup Casper.

Levchin said that the company will soon debut a number of partnerships with larger retailers and merchants.

Affirm faces competition from credit cards, of course, but also PayPal, which offers credit services at checkout as well.

As Levchin hasexplainedtoFortunepreviously, there is a huge opportunity to provide credit to younger customers, including millennials, who don't trust or use credit cards provided by large financial institutions. The company markets itself as being more transparent with its users about fees than established financial institutions, which would almost certainly dispute that assessment.

莱佛青正试图获得牵引力基于生长ing negative sentiment towards big banks amongst millennials, individuals born between 1981 and 2000. A Viacom Media company research study of around 10,000 millennials found that the big four banks are each among the 10 least-loved brands in America. In addition, the study found that 53 percent of Millennials don't think their bank offers anything different than other banks. And 71 percent said they would rather go to the dentist than listen to what banks are saying.

The online merchants who are offering Affirm are seeing an uptick in people return customers via the payments product. For buyers who have used Affirm and first order was above $250, 36 percent have come back and made a second purchase using Affirm.

"For retailers using Affirm, we've helped create a new class of buyers with higher loyalty and frequency," Levchin said.

Affirm will use the funds to expand its services to direct to consumer lending, as well as to consider M&A opportunities, said Levchin.