PayPal expands buy-it-now and pay-later with installment loans

(Bloomberg) — PayPal Holdings Inc. is pushing further into the growing “buy now, pay later” arena by offering installment loans for larger purchases.

Consumers will be able to make monthly payments on purchases of $199 to $10,000 for two years, PayPal said in a statement. Annual percentage rates on loans could reach 29.99% and consumers will be subject to credit approval. The move comes nearly two years after PayPal launched its 4-Pay offer, which allowed consumers to split purchases into 4 payments over six weeks.

“We’ve been really, really pleased with the progress and traction the 4-payment has received, but we’ve also heard quite frequently that one size doesn’t fit all,” said Greg Lisiewski, vice president of purchases and subsequent payments from PayPal. interview. “There’s a demand on both sides of the network — especially the consumer side — for additional choice.”

The San Jose, Calif.-based company is expanding its offerings as buy now, pay later is attracting rivals including Apple Inc., which announced Apple Pay Later earlier this month. Analysts expect consumers to spend more than $100 billion a year on such products by 2024.

Still, investors began to tire of the offers. PayPal’s stock has fallen 62% this year, outpacing the 28% drop in the S&P 500 information technology index.

Other companies known to buy now, pay later are also facing pressure. Klarna Bank AB is looking to exploit investors for more cash in a move that would lower the Swedish fintech’s valuation. And Block Inc. warned investors in recent weeks that credit losses soared 347% to $91 million in the first three months of the year, most of which came from its purchase of Afterpay.

For PayPal, the hope is that consumers will buy now, pay for a trial later, and then seek out more of its offerings. This will be crucial as the company strives to increase usage of its app rather than frantically adding new customers. PayPal has processed more than 105 million payment transactions in four, representing $15 billion in payment volume on its platform, since 2020.

“People perpetually need help managing their cash flow to fund larger purchases and to pay over time,” Lisiewski said. “This need is perpetual.”

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