(Fortune) – Banks and financial institutions have not created products that serve younger generations in the most efficient way, according to Max Levchin, the co-founder of eBay-owned payments giant PayPal. It’s a major opportunity for startups that seek to rethink financial technology—one Levchin hopes to leverage with his own, Affirm.
The young company has tasked itself with rethinking the way people—particularly millennials—borrow money, allowing them to obtain a micro-loan at a point of sale instead of using a credit card. The difference? Affirm charges an upfront fee for the service, typically between 6% and 30%, rather than tack on interest in the wake of the transaction.)
On Tuesday, Affirm will announce that it has raised $275 million in a round of debt and equity financing led by Spark Capital Growth and joined by new investors Jefferies and Andreessen Horowitz and existing investors Khosla Ventures and Lightspeed Venture Partners.
Levchin’s vision for Affirm is to offer modern-day banking products to the many people who are not adequately served by the FICO credit scoring system, don’t trust or use credit cards, are students, or are new U.S. citizens. How do you safely loan these people money? Levchin thinks a combination of transparency (upfront fee) and mobility (enabled by an app) can help.