After separating from eBay, PayPal has been on a march to grow both its international business and transactions beyond basic e-commerce. Today it is taking a step to do both, with the U.K. launch of PayPal Credit — a service that lets consumers use their PayPal accounts to spread out online payments for goods as a replacement for traditional credit cards.
It will give consumers online the option of buying with PayPal Credit across all PayPal-enabled sites, with purchases over £150 ($212) offered at 0 percent interest to sweeten the deal, and agreements with select retailers for special interest rates on their sites. Interestingly, as a point of comparison, PayPal offers an interest-free option in the U.S. at less than half that price, $99.
This is the first market for PayPal Credit outside of the U.S., where it launched in 2014 (as a rebranded and expanded Bill Me Later) along with a PayPal Extras MasterCard physical credit card, issued by Synchrony, and a money transfer service. The U.K. service for now has no plans for a physical card or money transfer service, the company tells me. If you’re wondering why it’s taken so long to expand outside the U.S., PayPal Credit has actually been lingering around in a limited U.K. pilot since 2014, when PayPal announced its intention to take the Credit service international.
Customers apply for PayPal Credit via PayPal’s site; after they are approved, their digital wallets essentially have an added credit option on them. The basic service comes in two tiers: those who spend more than £150 on any purchase via PayPal Credit are charged 0 percent interest for four months. (After this, those balances accrue interest at the standard variable rate, which is currently 17.9 percent interest p.a., PayPal says.)
On top of this, PayPal Credit is working with select retailers — Blacks, Chain Reaction Cycles, Dyson, Millets, Samsung, Simply Games and Ultimate Outdoors — to set up promotional interest rates around payment installment plans over periods longer than four months. These might also include 0 percent interest rates, although the terms vary by store.
The move to expand into credit services is an obvious move for PayPal as it looks to expand its brand as a go-to place for all things to do with financial services, and to make its platform more appealing to retailers, who now have a range of competing options when it comes to giving their customers ways to pay for goods.
“Today’s announcement is another example of how PayPal is so much more than a button on a website,” said Cameron McLean, Managing Director of PayPal U.K., in a statement. “We are using technology to reimagine money. For consumers, it’s about giving them more choice and convenience when shopping online. For businesses, we are enabling them to grow and offer their customers greater payment flexibility. It’s a sign of things to come. As a newly independent company, we will continue to partner with retailers to find new, improved ways for people to pay.”
The U.K. — a big market for PayPal and its former owner eBay — is a regular first-stop for PayPal when it expands new services outside of the U.S. Other products it has launched here to expand its payments business include Working Capital cash advances and — in a bid to grow its point-of-sale physical transaction business — PayPal Here (the first market where it introduced an EMV card reader that is now replacing the mag-stripe in the U.S.).