You may think of PayPal as exclusively giving you a way of sending money and shopping online. But the payment provider recently opened up its virtual credit option that promises to shake up how we can get loans and credit in the online domain.
Simply put, the PayPal Credit option acts just like a regular credit card, but without any physical attributes. It was set up to offer users a way to spread the cost of large purchases as it features 0% interest for four months on any goods or services bought online with a value of £99 or more.
Such is the success of the payment option that we’ve seen PayPal Credit reach £2 billion in lending in the UK since its launch in 2014. But how does PayPal credit work and how has it grown to become so popular?
The path to PayPal virtual credit
In little more than 20 years, PayPal has grown to have a customer base of over 300 million worldwide users. The brand acts as a payment processor for online vendors and has extended its global reach to include over 200 countries.
PayPal has recently become a payment option among China’s 100 million users of Baidu, and major UK retailers like Boots, Argos, John Lewis and Next now accept PayPal payments.
PayPal has grown to be especially successful in the online entertainment realm. Alongside streaming giants like Netflix and Spotify accepting PayPal, gaming brands like Steam, XBox and PlayStation allow users to buy games via PayPal. The online payment provider has also made a significant impact in the iGaming industry, and we’re seeing some PayPal casino sites that allow customers to make secure and instant deposits via the payment method, and also be able to make free withdrawals that can be processed in less than 24 hours.
How PayPal’s 0% credit works
The above examples all feature the standard PayPal online debit system. To try PayPal credit, customers will be required to fill out an application form and PayPal will swiftly judge whether your credit history is good enough.
Once you have been approved, you can enjoy a £1,200 credit limit. However, this limit could be increased by review once you have had PayPal Credit for over three months.
PayPal credit is currently accompanied by a variable 19.9% APR. But if you spend £99 or more in one single instance through PayPal Credit, you would automatically receive 0% interest on that purchase for four months. This offer can be used repeatedly on any purchase over £99.
In addition to this, the PayPal Credit scheme also allows you to spread the cost of payments over long periods by making monthly instalments of between six and 24 months at selected merchants.
There are currently over 1.5 million PayPal Credit accounts in the UK, and a growing number of retailers like Watches of Switzerland, Goldsmiths and Mappin & Webb now allow customers to pay via instalments. Some of these retailers have seen a 15% incremental increase in sales through using the payment scheme.
Enhanced safety protocols with PayPal
Given ongoing concerns about online security, the safety of the PayPal Credit option is of paramount importance. PayPal’s strict security protocols have meant that it has now become the payment method of choice for those who don’t want to enter in a debit card or credit card number for buying goods and services online.
Each transaction that you make through this payment method will be encrypted with the brand’s advanced encryption technology, and PayPal monitors each transaction 24/7 to counter any attempts at phishing, fraud and identity theft.
Plus the PayPal Buyer Protection Policy allows customers to claim a refund via chargeback, and there is a two-factor authentication to safeguard a customer’s finances.