Alex Rampell: The card payment interface is the singular best user interface ever created. It is the world's largest market by any stretch of imagination. And there are no niches in payments that are smaller than $100 billion.

Max Levchin: Once you go really big, the numbers get small, which is strange. There's a lot of volume, but the large volume revenue opportunities in payments tend to be the smaller dollar amounts.

Alex Rampell: There's always an opportunity to use another form of payment delivery device to satisfy a basic need. Convenience just trumps as the total amount you're trying to send goes down. The best user interface ever created is the credit card. This may actually be finally up for renegotiation because AI is already there. It's just that you haven't yet trusted your agent to do as good a job as you would.

Host: There is something else that you're surprised has not happened yet.

Max Levchin: I went to some cryptography related conference and presented a new idea in digital payments and was literally booed off stage because it was certainly not anonymous. And the big innovation of PayPal was what if we don't care about anonymity at all?

Host: So you guys go way back having co-founded a firm and met well before then. You guys are pioneers in fintech. You've been thinking about the space, trying to make sense of the present, thinking about where the future is going for 20 plus years, 25 years, maybe even more. And I'm curious, given so much time has passed since you first got into the space, what has most surprised you about what has happened, what hasn't happened, what did you expect to happen in the early 2000s of how this space would play out? Maybe Alex, why don't you start?

Alex Rampell: I think the rise of Apple Pay and Google Pay and the extent to which they've really penetrated. Because it's very hard to change consumer behavior in general, and it was a bizarre set of accidents if you will. Where there is this merchant liability shift because magstripes were so easily cloned. Visa and Mastercard and the networks said if you don't get an EMV POS terminal that you can dip the card into, you the merchant are on the hook if somebody steals a bunch of card numbers and makes a fake card.

Host: Europe card?

Alex Rampell: Euro card.

Max Levchin: I don't know. The Europeans somehow got their say because they always do. They insert their not electronic...

Alex Rampell: Yeah, it's Eurocard, Mastercard, Visa. So it was called the EMV switch. So all of these machines, if you did not want to be liable—like I could go to Best Buy, buy a TV and charge back—you had to buy a new machine. And it just so happened that all of the new hardware included NFC chips. If you had had to convince all these merchants to buy a new machine just for Apple Pay, it would have taken 20 years. But everybody got these machines over a 2 to 3-year period. When people had Apple Pay on their phones, they could just tap it. But I'm surprised that other form factors haven't really taken off.

Host: How about you Max? You were dreaming about what the future of money would look like a long time ago. What has surprised you about what has happened or what hasn't happened?

Max Levchin: Yeah.

Alex Rampell: Although it's interesting like once you go really big, the numbers get small, which is strange, right? Like if I send a $100 million wire from Bank of America to JPMorgan Chase, it costs like $25. But the large volume revenue opportunities in payments tend to be the smaller dollar amounts.

Max Levchin: I was trying to find the original email between the two of us where we start mentioning what becomes Affirm eventually...

Alex Rampell: Well, and that's actually funny you mentioned, I bought the domain paymesooner.com.

Max Levchin: As a result so it's like, "Ah, Bill Me Later was a good idea, Pay Me Sooner would be an even better idea."

Alex Rampell: There are some healthy businesses these days in both accounts payable financing and accounts receivable financing. But it's not a very profitable business for whoever processes raw volume.

Max Levchin: Yes.

Host: What's another idea that you're surprised does not exist yet that you were thinking at some point?

Max Levchin: Amazon actually just discontinued the whole thumb payment at Whole Foods.

Alex Rampell: They actually... It's not a thumb payment, it's the palm. The palm, yeah.

Max Levchin: I loved it. I would literally go to Whole Foods next to whatever hotel I'd be staying in.

Alex Rampell: I was sad that they got rid of it. I used to use it, too.

Max Levchin: It's actually not even faster. It's just fun.

Alex Rampell: I know. It's probably slower.

Max Levchin: It is slower. It's like tell me my fortune and these grapes.

Alex Rampell: The fortune is: you owe me money. That is the only fortune that you ever get.

Max Levchin: That's right. When sort of the crypto industry was becoming popular, or when some of the major projects launched...

Alex Rampell: So I'm frequently late to trends. I'm not the world's earliest adopter of the majority of things.

Host: I feel like PayPal is pretty early, right?

Max Levchin: Well, sort of. To give you full context for PayPal: buying coffee is not the most important metric because there's no reason to hide your identity when getting coffee in the morning. You just want maximum convenience and speed.

Alex Rampell: There's always an opportunity to use another form of payment delivery device to satisfy a basic need. Convenience just trumps as the total amount you're trying to send goes down.

Host: I want you to take us both back down memory lane. What was the beginning of Affirm and how did that evolve?

Alex Rampell: Well, hopefully our stories match.

Max Levchin: Yeah, we should put us in separate rooms for questions.

Alex Rampell: Who would do such a thing? But you know, you're buying coins in FarmVille or virtual poker chips.

Max Levchin: Yes. And this wouldn't have worked today because now obviously I would have used Gemini or ChatGPT to write this.

Alex Rampell: You're revealing all my secrets.

Max Levchin: Yes, exactly. Because I know how much you love Vic's. We had coffee there and that's where we discussed it. We were talking about checkout friction on mobile and web—entering 16-digit card numbers, expiration dates, and security codes was terrible. Drop-off rates were 70-80% for digital goods. Alex was running TrialPay, where users did alternate actions to get digital goods. Our thesis was: why not underwrite consumers on the fly with minimal identity inputs (name, phone, DOB), provide an instant installment loan in seconds, and pay the merchant immediately?

Alex Rampell: The motivation was similar: TrialPay was in the throes of selling to PayPal, but then they left me at the altar. We had all these merchant relationships and insights, so we decided to test this installment lending model directly.

Max Levchin: Oh yeah, I don't find it a negative thing.

Alex Rampell: No, it was funny. We had this meeting with 1-800-Flowers. We went through the pitch over breakfast with their senior executives.

Max Levchin: Two colorful points from that breakfast: In the middle of it, the guy goes, "Oh yeah, we used to do exactly this!"

Alex Rampell: Then we got handed to Amit Shah, who actually now runs a successful startup.

Max Levchin: Yes.

Alex Rampell: Amit took over. He was very excited, but I remember I came up with a mock flow in Microsoft Word showing how a customer could check out with two clicks.

Max Levchin: You had like a real finance employee.

Alex Rampell: I showed him this, and he was like, "Free flowers, right? Because they just don't have to pay you back."

Max Levchin: So cynical.

Alex Rampell: He literally said, "Free flowers. This is a great deal, free flowers."

Max Levchin: This is generally a very smart but cynical guy. We were not going to be perturbed by some cynicism.

Alex Rampell: At the time, I think it was still called Expedite.

Max Levchin: Yeah, it briefly bumped around as Expedite, and then we finally renamed it.

Alex Rampell: It was incorporated as Expedite Software Inc.

Max Levchin: Yeah, I think that's right.

Host: And so how did the idea evolve as you went from there? When did it start to really get product-market fit or how did the space play out?

Max Levchin: Every startup has the '40 years in the desert'—it's just a given if it's worth talking about ex-post. Some people just quit. We started with virtual goods and low AOV, but unit economics didn't make sense. Until we pivoted to high-AOV direct-to-consumer (DTC) merchants. One of our earliest champions was an entrepreneur selling luxury pajamas and apparel.

Alex Rampell: Oh yeah, I just saw her. She's wonderful. And she was an early advocate for us.

Max Levchin: Because her business literally transformed.

Alex Rampell: I forgot about her.

Max Levchin: She would email me screenshots of her dashboards and say, "This is the Affirm effect. Here's a 35% pop you guys caused for me. Please do more."

Alex Rampell: There was a solution to the pajama problem, and then it was also all the mattress companies.

Max Levchin: Oh yes, that was the big one.

Alex Rampell: That was another... that was the big one. I remember it's like, wait, there's a company called Purple, a company called Casper...

Max Levchin: It was an incredible wave. A memory foam mattress cost $1,000 to $2,000. High ticket size. Consumers loved paying over 12 months, and mattress companies had huge margins and fierce CAC competition, so they were eager to pay high Merchant Discount Rates (MDR) and subsidize 0% APR financing to boost checkout conversions. Then the next boom was for-profit vocational training and coding bootcamps.

Alex Rampell: Some of them like Apollo Group, University of Phoenix, coding academies.

Max Levchin: Coding academies were charging $15k–$20k. They were willing to pay enormous MDRs. But we ran out of that space kicking and screaming because the reason they were willing to pay high fees was that the educational quality was often dubious, and students couldn't get jobs to repay the loans. It transferred default risk onto the lender. Since Affirm's mission was to be aligned with consumers, we refused to underwrite predatory education loans and exited the space entirely.

Alex Rampell: The mattress manufacturing was actually all consolidated. They paid very little for the foam, but spent everything on marketing.

Max Levchin: Their value equation was fascinating. The cost of goods was low, shipping compressed foam in a box was cheap, so their entire battle was CAC and conversion. Offering Affirm's transparent, no-late-fee monthly installments became their primary conversion lever.

Host: While we're doing a historical episode, I also want to ask a question about PayPal history. The book 'The Founders' came out recently and there's been a lot of revisiting of PayPal. What were the defining factors that allowed you to survive and win?

Max Levchin: There's an old answer and a new answer. The canonical answer is risk management and fraud detection. Around 2000, internet fraud exploded. Syndicates were using stolen cards to drain funds. Traditional banks with multi-day batch processing couldn't handle real-time internet-speed fraud. PayPal survived because we engineered proprietary real-time fraud models (like the Gausebeck-Levchin test and Project Igor) to stop bad actors in milliseconds. Without fraud defense, viral growth on eBay would have just accelerated bankruptcy.

Alex Rampell: You already have the burden of supporting your product and dealing with chargebacks. A payments company that fails at fraud prevention will get completely destroyed by network penalties and chargeback losses.

Host: Is there anything we didn't get to that you want to make sure that we get to while we're here?

Max Levchin: I'm probably less optimistic about agentic shopping, and I'm very optimistic about agentic payments.

Max Levchin: The notion that robots will buy our Friday night outfits is misguided. We want to know what we look like long before the robot delivers it. Shopping is emotional, aesthetic, and self-expressive. But payments are completely the opposite.

Alex Rampell: I mostly agree, but research vs payment are different. For research, AI is a great tool, like asking a friend about bike parts. But for payments: I have nine different credit cards. I don't remember the Chase Amazon card terms for a non-restaurant purchase under $500 versus another card's cashback promotion or 0% APR teaser rate.

Max Levchin: Exactly. That's the immense opportunity for Agentic Payments. At the point of sale, optimizing between: Which card gives maximum points? Which payment method has purchase protection? Should I pay now or use a 0% APR installment with Affirm while keeping cash in high-yield savings? Humans cannot calculate that multi-variable optimization in 3 seconds, but an AI Agent can do it instantly.

Host: That's a great note to end on. We'll definitely have to do a part two to talk more about the future. Max, Alex, thanks so much for joining us!