PayPal, which until now has been a conduit to send payment from a buyer’s checking account or credit card account to a seller, is becoming an issuer of credit. Working with consumer finance company GE Consumer Finance, PayPal is offering a line of credit for consumers to use at eBay or any site that accepts PayPal for payment. PayPal, a unit of eBay Inc., announced the new service today at the eBay Live Community Conference in New Orleans.
Users of PayPal Buyer Credit, as the product will be known, will receive full Buyer Protection from PayPal if their items are significantly different from how they are described on eBay or if their items never arrive.
PayPal Buyer Credit also allows eBay sellers to offer buyers a deferred interest option for up to three, six or 12 months on purchases over $199. “With these promotional financing offers, eBay sellers of all sizes can make their items more affordable to buyers and be competitive with traditional retailers that offer similar financing,” PayPal says. “Because buyers make payments directly to GE Consumer Finance, sellers are not at risk of buyer payment default. Sellers get paid in full by PayPal immediately upon close of the transaction.”
Sellers who want to offer deferred interest to their customers pay a fee in addition to the discount they pay to accept PayPal. For three months deferral, sellers pay 0.5%; six months, 1.75%; and 12 months, 3.75%.
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