Original URL: http://www.theregister.co.uk/2013/02/27/affirm_mobile_two_click_payment/

PayPal founder sets up mobile payment service verified by FACEBOOK

2-click buy-now-pay-later system

By Brid-Aine Parnell

Posted in Mobile, 27th February 2013 11:23 GMT

PayPal co-founder Max Levchin has launched his new payments startup, Affirm, to fight it out in the rapidly expanding arena of mobile payments.

The new firm will use customers' Facebook accounts to authenticate their identity, allowing them to buy stuff on their mobes with just two taps.

"Affirm brings two-tap checkout to any mobile retail experience and liberates abandoned carts from an eternity in mobile shopping cart limbo," the company website says.

Affirm gets away with using such basic info and security by paying for the goods for the shopper and then giving them 30 days, interest-free (at least for now), to fully enter their details at the firm's website to pay them back. It will make its money by charging sellers "a small fee".

Etailers are likely to want to sign up with Affirm to stop mobile shoppers giving up on purchases when the required information entry is too complex or takes too long for smaller phones or when they're not in a position to whip out their credit cards.

Levchin's startup is by no means the first to try to simplify shopping on the go by getting folks to buy now and pay later. In the UK, PayForIt allows merchants to sign up with a processing party which collects money from network operators who then go on to grab the cash from their customers, with both the processor and operator taking a cut.

Swedish firm Klarna also offers a similar service to Affirm in a number of European countries, with options to pay for each item after receiving them or pay monthly for all goods and spread payments out. The company says it processed €1.8bn in transactions in 2012.

Although there are plenty of established competitors in the payment field, Levchin clearly thinks that a "low-digit millions" funded startup has a chance.

“I just think there is so much more to do. Technology has come a long way since PayPal," he told AllThingsD.

“Payments online are still too hard — we started the revolution with PayPal and democratised payments for small businesses, but we stopped short of changing the system,” he said. “The world is now awash in data and we can see consumers in a lot clearer ways."

That data is both the blessing and the curse for online and mobile payment firms. Levchin is hoping to authenticate users with Facebook, zip (post) codes and mobile device IDs and will also using that information to assess whether someone is likely to pay up when the time comes.

But the system is going to need pretty sophisticated fraud-detection software to stop any coordinated efforts at corruption and will become unpopular pretty quickly if it's essentially rejecting people for credit left, right and centre. There will also be the inevitable cries over privacy violation, whether warranted or not. ®