PayPal Reduces Its Promotional Financing Threshold To Boost Its Credit Service

The warmth of late summer still bathes much of the country, but PayPal Holdings Inc. already has its eyes on the upcoming holiday spending season. The online commerce leader today unveiled a zero-interest financing promotion for its PayPal Credit service with a lowered purchase threshold.

In addition to charging no annual percentage rate for three months, the promotion applies to purchases as low as $30. “Prior to this enhancement, $99 was the lowest amount available for 0% APR,” a PayPal spokesperson tells Digital Transactions News by email.

PayPal-accepting retailers that have integrated PayPal Credit into their online storefronts can offer the service, and they get paid in full after a customer approved for a PayPal Credit revolving credit line chooses to finance a purchase. Financing and credit decisions are made by PayPal’s banking partner, Synchrony Financial.

San Jose, Calif.-based PayPal says the promotion is a pilot program this this year that will be expanded in 2020. Merchants that add the PayPal Credit option on their Web sites are eligible to participate. “We are in active conversations with retailers at this time,” the spokesperson says.

PayPal’s new promotion ramps up competition in the already intensely competitive market for transactional credit. Besides PayPal, fintech providers in the space include Affirm, Klarna and GreenSky. Even the bank card networks are getting into the act: Mastercard Inc. recently acquired credit provider Vyze Inc., and Visa Inc. is developing application programming interfaces to support point-of-sale financing.

According to a PayPal news release, retailers see an average 15% increase in incremental sales starting within the first three months of adding a PayPal Credit option. The company also cited a survey of 2,000 users in which 56% said they were more likely to shop at a retailer again if the merchant offered PayPal Credit.

“We are responding to consumer and retailer demand,” the spokesperson says. “We know that consumers are increasingly looking for flexibility in POS financing. In fact, 80% of PayPal Credit transactions are under $99, even without a special financing offer.”