PayPal Holdings Inc (NASDAQ:PYPL) on Wednesday extended consumer credit facilities in the United Kingdom with its newly launched “PayPal Pay in 3” scheme. The credit facility is available on purchases of up to €2,000 at a zero interest charge and can be repaid in installments over a period of three months.
What Happened: The online payment platform expects that its brand recognition could drive its "buy now, pay later" service, compared to competitors in the consumer credit space, according to CNBC. To prevent consumer overspending, PayPal remarked that it would adhere to responsible lending practices and perform “affordability checks”.
Rob Harper, the Director of PayPal’s enterprise accounts in the U.K., commented, “We’ve also seen the rise of buy now, pay later solutions in the market; brands like Klarna, but also smaller brands that are entering into the market that are not as recognizable as PayPal.”
In Q2, PayPal had a 24 million active user base in the U.K and faces competition from Swedish online financial service provider Klarna Bank AB and the Australian fintech firm After Limited’s credit platform Clearpay.
Why Does It Matter: PayPal's presence in credit services is growing systematically. On Aug. 31, PayPal announced the launch of Pay in 4 - a similar credit facility for shoppers in the U.S.
In April this year, PayPal was one of the Fed-approved fintech companies to dispense small business loans under the $2 trillion coronavirus relief package.
Price Action: PYPL closed Tuesday’s trading hours at $207.74, 3.09% higher.
Photo courtesy: PayPal