PayPal Credit, PayPal’s proprietary online consumer financing product, reached $50 billion in total payment volume (TPV) in the US since 2008, when PayPal acquired BillMeLater and rebranded it as PayPal Credit.
Business Insider Intelligence
The firm also noted that PayPal Credit — which allows PayPal users to split payments of $99 or more and pay them out over six months — is seeing significant growth in Germany and the UK.
PayPal Credit saw particularly high volume in 2018, which was likely fueled by growing consumer awareness of alternative financing options. PayPal Credit reached $10 billion in TPV during 2018 alone, comprising 20% of the segment’s 10-year cumulative TPV, with more than $2 billion coming during November and December.
High volume in 2018 can likely be attributed in part to increasing consumer awareness of alternative forms of financing for purchases — 78% of US consumers were aware of point-of-sale (POS) financing options as of 2017, up from 51% in 2015 — which will likely continue to be instrumental in driving volume going forward.
PayPal can leverage its massive user base and high brand awareness to drive PayPal Credit volume as financing becomes more popular.
- PayPal’s established presence can allow it to cement its leading position in the online financing space amid crowding. PayPal products count a notably high 88.7%conversion rate — nearly twice the national average of other checkout solutions — likely due to the firm’s wide established user base, strong brand recognition, and consumer loyalty and trust. And consumers have shown a strong preference for PayPal at checkout — 52% of customers made more online purchases because PayPal was offered as a checkout option, and one-third wouldn’t have completed a purchase without it, according to a ComScore study — and that can carry over to PayPal Credit as consumer appetite for financing solutions grows. Further, strong brand recognition and customer loyalty can ultimately make PayPal Credit stand out among other financing solutions as the space becomes more crowded with firms like Affirm, Afterpay, Klarna, and Splitit ramping up their presence and offerings.
- Merchants should take note of PayPal’s impact as consumer appetite for financing options increases. Offering financing solutions could get retailers to drive sales as they often make out-of-reach purchases more attainable and affordable and even promote higher spending: 39% of consumers would spend more money if given instant credit options when shopping online, according to a Klarna study. And these solutions — which often don’t charge interest — are particularly attractive solutions for customers who might not want to put big purchases on credit cards and rack up interest. Integrating financing solutions into their online checkout pages can ultimately allow retailers to reduce cart abandonment and drive repeat customers: 56% of US PayPal Credit users surveyed say they are more likely to shop at a retailer again if they offer PayPal Credit, according to a PayPal and Logica Research study.
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Source: Business Insider