NEW YORK (MainStreet) — Hate credit cards? But want to buy on time anyway? Venture capital backed Affirm - launched by a PayPal founder, Max Levchin - may be your ticket to ownership as the 21st-century answer to layaway.

Fact: 36% of Millennials have never had a credit card, said CreditCards.com. Add as with many, many millions of other Americans whose credit blew up during the Great Recession and, by any calculus, many of us have burned out on traditional credit card vehicles. “A lot of people are tired of credit cards; they are customer unfriendly,” said John Di Frances, managing partner of consulting firm Di Frances and Associates.

Enter Affirm, which said it will provide consumers who lack Mastercard or Visa with an alternative way to finance online purchases that lets them buy over time, sometimes with lower interest rates than charged by traditional credit issuers and with what Affirm insisted is an absence of sneaky charges. “We never charge any compounding interest and there are no hidden fees," Affirm says. "We strive always to be more transparent and fair than any other form of financing.”

Affirm also insisted that it uses a variety of credit scoring sources in making decisions to lend or deny and some of these sources - such as a would-be borrower’s LinkedIn account data - are notable departures from traditional credit scoring. That, Affirm has said, is key in assessing a younger demographic that in many cases has scant credit history to review.

Sounds far out? It is. Understand this: there has been little innovation in credit for many years, said Brian Billingsley, North American CEO at Klarna, a European mobile payments provider that is poised to soon enter the U.S. market. “Traditional issuers are not progressive," he said. "They aren’t doing anything new.” But Billingsley also said he believed that now is the time to disrupt traditional credit issuers because of the long lack of innovation coupled with a deep Millennial dislike for credit cards.

An Affirm survey underlined that dislike. According to its numbers, among Millennials, just 19.9% cite credit cards as their preferred payment tool. Debit cards notched 40%.

So, why shouldn’t you race over to Affirm to buy stuff? For starters, it currently claims nine merchants and, no, we have not heard of any of them either - Tradesy, Casper, UNIF Clothing, Beautylish, Bedroom Furniture Discounts, Smile Care Club, Ice.com, FIG Stores and Boosted Boards. “The list of partner shops looks short to me,” said Alex Gerard, credit card expert and CEO of CardsMix.com.

That merchant list of course will grow as the company gains consumers.

How does a consumer actually use Affirm to pay? The way it works is this: navigate to an Affirm merchant, select your merchandise, then click "Checkout" with Affirm. Customers are prompted to enter a few personal details, and they must have a valid postpaid cellular number (not prepaid) that can accept SMS to get an Affirm account. VOIP numbers - Skype, Google Voice, etc - are not eligible. Affirm said credit decisions happen in an instant.

Know, too, Affirm very much does charge interest that, it said, ranges from 10 to 30% APR. The rate is determined by the borrower’s credit and also by the length of the payoff, which can be 3, 6, or 12 months. In some cases, said Robert Harrow, a credit card expert with ValuePenguin, the interest paid Affirm will in fact be higher than the interest paid on many traditional credit cards. CreditCards.com, in its latest report, in fact reported the nation’s average APR at 15.07%.

So the money question is: should you use it? Harrow, himself a Millennial, said he would not use it and would recommend to friends that they don’t. He cited the sometimes high interest rates and added too that much of what is available via Affirm is merchandise - beauty supplies, skateboards - that, he insisted, consumers should never finance. “Just don’t get into paying interest,” he said, adding that his data indicated that the average loan amount was only $400. “Affirm reinforces bad consumer behavior,” he added.

But you want the gear anyway - and you do not have traditional credit instruments? Venture capitalists have bet some $320 million that Affirm makes good business sense. And just maybe it does, for them and also perhaps for the creditless who nonetheless want that new bedroom set.

—Written by Robert McGarvey for MainStreet

This article is commentary by an independent contributor. At the time of publication, the author held TK positions in the stocks mentioned.

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