PayPal Holdings Inc. is expanding its buy-now pay-later offerings during an eventful month for the BNPL category.
The digital-payments pioneer said Wednesday that it would introduce a new installment offering, which allows people to break purchases into monthly chunks, adding to its suite of options for shoppers looking to pay for items over time.
Those approved for the Pay Monthly installment program will be able to choose from up to three options of various lengths, according to a release. The plans will carry “risk-based APR ranging from 0%-29.99%” and span six to 24 months.
A PayPal spokesperson noted that while there won’t be 0% APR offers by default through Pay Monthly, merchants will be able to introduce 0% APR promotions upon the full launch of the feature this summer.
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“How consumers look to pay for larger purchases is evolving and there is a growing demand for flexible payment options,” Greg Lisiewski, PayPal’s vice president of global pay-later products said in the press release, while noting that 22 million PayPal PYPL, -1.71% users have opted for a pay-later offering in the past year. Pay Monthly aims to “ensure checkout matches their needs and budgeting preferences.”
PayPal introduced a Pay In 4 installment offering in 2020, letting consumers make interest-free payments in chunks over the span of six weeks. Additionally, the company has long offered a more traditional lending product that gives people a line of credit, asks for minimum monthly payments, and doesn’t charge interest if a consumer pays back the cost in full within six months. PayPal will continue to offer both services in addition to Pay Monthly.
The introduction of Pay Monthly comes as the world of installment payments continues to evolve. Apple Inc. AAPL, +0.67% said earlier this month that it would debut an interest-free pay-later feature, for which the company will handle its own lending decisions. Meanwhile, shares of BNPL pure-play Affirm Holdings Inc. AFRM, -1.23% have tumbled more than 80% so far this year, in part due to concerns about how the market for BNPL services will hold up in more stressful economic conditions.
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PayPal has seen its own shares come under pressure as well, resulting in a roughly 60% year-to-date decline. While once-hot financial-technology stocks more generally have struggled in recent months, PayPal also is dealing with some self-inflicted wounds after resetting aggressive growth expectations and admitting that it needs to “do better” to satisfy investors.