From launch in 1998 by one of America’s most notable investors, Peter Thiel, to going public in 2002, PayPal quickly established itself as a pioneer in the online digital wallet space. Today, PayPal is an $11 billion-plus organization specializing in online payment transfers, an excellent alternative to traditional money orders, checks, debit cards, etc.
In 2000, a service called “Bill Me Later” was introduced as a revolving credit line from Comenity Capital Bank, which allowed consumers to have “retail/point of sale financing” that covered the entire purchase of their products, with various promotions such as no interest for “X” number of months. PayPal would go onto acquire “Bill Me Later” in 2008 and in a couple of years, rename the program to PayPal Credit. As an avid user of PayPal Credit, I wanted to take a moment to detail the structure of the program, including benefits that you can utilize as a small business owner.
Still Managed Through Comenity Capital Bank
Today, PayPal Credit is still managed as a line of credit from Comenity Capital Bank, allowing consumers and businesses the ability to pay for purchases over time with special promotions of no interest charged if the entire bill is paid within six months.
In general to qualify for the no interest promotion, the purchase must be over $99. If the entire bill is not paid within six months, there’s usually a 19.99% (or more) APR associated with the account if you carry a balance, with payment terms that usually go up to 36 months. There’s neither an annual fee nor application fee to open an account, but there are various charges ($25 to $40, give or take) for not paying on time.
Not Like The Typical Credit Card
PayPal Credit has some things in common with a traditional credit card, but lacks other details in comparison.
Zero Fraud Liability, which means if your account is hacked or unauthorized charges end up on your account in some other fashion, you will not be responsible for said charges.
No Rewards, and the only perk available is the no interest for six months deal. Also, PayPal Credit does not (as of this writing) report your payment activity to any of the three major credit bureaus. So if you are looking to establish good payment history, this would not be a good source to utilize for that objective.
PayPal Credit is accepted anywhere that PayPal is accepted. If the retailer accepts PayPal, you will be provided the option to pay using PayPal Credit during the checkout sequence. If you don’t have a PayPal Credit account, you can always apply for one during the checkout sequence. You will need to have a regular PayPal account already setup and then you can go through the quick application process to see what decision is made on your account.
Online Account Management
You can log into your PayPal account to manage your PayPal Credit account very easily. You will be able to check statements, initiate payments, investigate charges, and more. You can make payments on your PayPal Credit balance directly from a linked bank account or through monies in your PayPal balance.
Small Business Financing
PayPal Credit can be an excellent resource for small business financing. If you purchase marketing materials, inventory, supplies, or other items from vendors and suppliers that utilize PayPal as a payment option, you can take advantage of PayPal Credit’s 6 month no interest option on purchases over $99. This would save you in interest costs over utilizing most credit cards and other revolving lines.
This article was originally written on December 11, 2017 and updated on January 27, 2021.