Stripe

Affirm

Stripe

Stripe charges a flat 2.9% + $0.30 per transaction. That's it.

No setup fees, no monthly fees, no hidden charges. The simplicity is the product.

When a customer pays on a website using Stripe, Stripe handles everything — fraud detection, currency conversion, bank transfers, tax calculation, compliance. The merchant just sees money arrive in their account.

On top of the core payments, Stripe has built an entire financial infrastructure stack. Billing for subscriptions, Connect for marketplace payments, Atlas for incorporating a company, Issuing for creating virtual cards, Treasury for banking-as-a-service, and Radar for fraud prevention.

They're basically building the financial plumbing for the entire internet.

Affirm

Affirm makes money from two sources. First, merchant fees — when a retailer offers Affirm at checkout, Affirm charges the merchant 5-8% of the transaction value.

Merchants pay because Affirm increases average order values by 85% and conversion rates by 20%. Second, consumer interest — on longer-term loans (6-48 months), Affirm charges interest ranging from 0% to 36% APR depending on the buyer's credit profile.

The 0% APR loans are fully subsidized by the merchant.

Stripe

Patrick Collison was 19. His brother John was 17.

They had already built and sold a company — Auctomatic, an eBay auction tool — for $5 million while still teenagers in Limerick, Ireland. Patrick went to MIT, John went to Harvard, and they both dropped out because they had a better idea.

The idea was embarrassingly obvious in hindsight. In 2010, accepting payments on the internet was a nightmare.

You had to get a merchant account, negotiate with a payment processor, deal with a gateway provider, handle PCI compliance, and write thousands of lines of code. It took weeks or months.

The Collisons thought it should take five minutes.

They built a simple API — seven lines of code — that let any developer start accepting credit card payments immediately. No merchant account.

No paperwork. No phone calls with banks.

Just paste seven lines of code and you're in business. They originally called it /dev/payments, then changed it to Stripe in 2011.

Peter Thiel and Elon Musk — the PayPal mafia — were among the first investors. Sequoia and Andreessen Horowitz piled in soon after.

The Collisons had built exactly what every developer on Earth had been wishing for.

Affirm

Max Levchin was one of the original PayPal Mafia — he co-founded PayPal with Peter Thiel and Elon Musk. After PayPal sold to eBay for $1.5 billion in 2002, Levchin built several companies including Slide (sold to Google for $182 million).

But he kept coming back to the same idea: consumer credit was fundamentally broken.

Credit cards were designed in the 1950s and hadn't meaningfully changed. They used opaque pricing — minimum payments that stretched debt over decades, late fees that punished the most vulnerable, and interest rates that compounded until people owed three times what they originally spent.

Levchin thought technology could do better.

In 2012, he founded Affirm with a radical proposition: transparent lending. When you buy something with Affirm, you see the exact total cost upfront — the principal, the interest, and the exact number of payments.

The total never changes. There are no late fees.

If you miss a payment, Affirm pauses your ability to buy more but doesn't charge you extra. The idea was to make lending honest.

Stripe

Stripe grew almost entirely through developer love. They didn't hire a sales team for years.

They didn't run ads. They just built the best developer documentation anyone had ever seen and let word of mouth do the rest.

The developer-first strategy was deliberate. The Collisons realized that in a startup, the developer usually decides which payment provider to use.

If you make the developer happy, you win the company. Stripe's API documentation became legendary — clear, beautiful, with working code examples in every language.

They also grew by growing with their customers. Early Stripe customers included tiny startups that later became giants — Lyft, DoorDash, Instacart, Shopify.

As those companies scaled to billions in revenue, Stripe's processing volume scaled with them. Stripe didn't need to acquire new customers because its existing ones kept getting bigger.

The international expansion was methodical. Instead of launching everywhere at once like Uber, Stripe carefully added country after country, making sure each one worked perfectly with local payment methods, currencies, and regulations.

By 2024 they were processing payments in 195 countries.

Affirm

Affirm grew by landing big merchant partnerships. The breakthrough was Peloton in 2019 — when Peloton offered Affirm financing at checkout for its $2,000+ exercise bikes, both companies exploded.

A huge portion of Peloton purchases were financed through Affirm. Then came Walmart, Amazon, Shopify, and Target.

Each major retailer partnership brought millions of new consumers.

The "no hidden fees" message cut through. In a world where every financial product has fine print, Affirm's transparency was refreshing.

Levchin made honesty the brand. Every ad, every checkout screen, every email showed the exact total cost with zero surprises.

Consumers who had been burned by credit cards were drawn to a product that treated them like adults.

The Shopify integration in 2020 was a game-changer. Shop Pay Installments, powered by Affirm, made BNPL available to hundreds of thousands of Shopify merchants instantly.

Overnight, Affirm went from needing individual merchant partnerships to being embedded in an entire e-commerce ecosystem.

Stripe

Valuation whiplash. In 2021, Stripe hit a peak valuation of $95 billion during the fintech boom.

By 2023, they had to mark it down to $50 billion during the tech correction — a 47% drop that made headlines everywhere. Employees who had been paper millionaires suddenly weren't.

The valuation has since recovered to $91 billion after a secondary share sale in 2025, but those two years were rough for morale.

Competition is relentless. Adyen, the Dutch payments company, has been eating into Stripe's enterprise market.

Square (now Block) competes on the small business side. PayPal is everywhere.

New fintech players pop up constantly. The payments business has razor-thin margins and everyone is fighting for the same 2.9%.

Going public is the elephant in the room. Stripe has been expected to IPO for years.

Investors, employees, and the media keep asking when. The Collisons have consistently said they're in no rush, but with $8.7 billion raised and thousands of employees holding stock options, the pressure to provide liquidity is enormous.

As of 2025, they've opted for secondary sales instead of a public offering.

Affirm

Peloton dependency almost sank the company. At its peak, Peloton accounted for nearly 30% of Affirm's revenue.

When Peloton's business collapsed after COVID — demand evaporated, the stock crashed 95%, and the company laid off thousands — Affirm lost its biggest customer practically overnight. The stock fell from $170 to $9.

Affirm has since diversified, but the Peloton lesson was brutal.

Credit risk is the fundamental challenge. Affirm is lending money to consumers.

If the economy goes into recession and people stop paying, Affirm takes the losses. Delinquency rates have crept up as the post-COVID economy normalized.

Unlike banks that have decades of lending data and massive balance sheets, Affirm is still proving its underwriting models work through a full economic cycle.

The BNPL category has attracted regulatory scrutiny. The CFPB has warned that buy-now-pay-later products can lead to debt accumulation — consumers stacking multiple BNPL loans across different providers.

Affirm argues its model is fundamentally different from competitors because it underwrites every transaction and never charges late fees, but the regulatory risk applies to the entire category.

Stripe

Stripe Payments is the core — accept credit cards, debit cards, Apple Pay, Google Pay, and 135+ payment methods in 195 countries. Stripe Connect lets marketplaces and platforms pay out to sellers (Shopify, Lyft, DoorDash all use it).

Stripe Billing handles subscription and recurring billing. Stripe Atlas lets you incorporate a US company from anywhere in the world — fill out a form, get a Delaware C-corp, bank account, and tax ID in days.

Stripe Radar uses machine learning to block fraud in real time. Stripe Treasury lets platforms offer banking services to their customers.

Stripe Tax automatically calculates and collects sales tax in every jurisdiction.

Affirm

Affirm Pay-over-Time lets shoppers split purchases into biweekly or monthly payments at checkout. Affirm Pay-in-4 is the interest-free option — four payments over six weeks with no interest.

The Affirm Card is a physical debit card that lets you use Affirm anywhere Visa is accepted, not just at partner merchants. Affirm Savings is a high-yield savings account.

The Adaptive Checkout technology shows each customer personalized payment options based on their credit profile in real time.

Stripe

Peter Thiel, Elon Musk, Sequoia Capital, Andreessen Horowitz, General Catalyst, Founders Fund, Tiger Global, GV (Google Ventures), Goldman Sachs, Baillie Gifford

Affirm

Khosla Ventures, Lightspeed Venture Partners, Founders Fund, Spark Capital, GIC, Baillie Gifford