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PayPal Credit comes to the UK with interest-free plans

Engadget Engadget 14/04/2016 Nick Summers
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PayPal wants to be the method that everyone naturally defers to when buying goods and services online. Instead of grabbing your debit or credit card, the company wants you to naturally hit the PayPal button whenever you reach the checkout. To incentivise this, it's rolling out a service called PayPal Credit in the UK, which helps you make purchases even when you don't have the funds in your bank account. You'll need to apply for the privilege online, but if you pass the company's credit check you can get zero percent interest on orders over £150 for the first four months.

That means PayPal won't charge a premium if you can pay back the money you borrowed within four months. Anything left over after this period will, however, be subject to a typical interest rate of 17.9 percent p.a (variable). PayPal is basing that figure on an "assumed" credit limit of £1,200 -- both could vary depending on your particular circumstance. Furthermore, The four-month window isn't a one-time promotion, so you'll be eligible for the scheme every time you order something that's worth more than £150. The main caveat is that the site you're ordering from has to support PayPal.

In addition, PayPal has partnered with the following retailers to offer alternative instalment plans: Blacks, Chain Reaction Cycles, Dyson, Millets, Samsung, Simply Games and Ultimate Outdoors. Dyson, for instance, will offer 14.9 percent interest over a six, 12 or 24 month period on orders over £199. Chain Reaction Cycles, meanwhile, will offer the same 14.9 percent rate and for purchases as low as £99, with either a 12 or 24 month plan.

Many companies, especially those making or selling luxury goods, already offer their own instalment plans. To be successful, PayPal will need to stay competitive with its own deals and interest rates, and continue to thrash out similar deals that can be picked up through its retailer partners. Amazon, for instance, has a similar scheme in the UK called Pay Monthly, however it's only eligible for orders made through its own storefront.

PayPal Credit used to be called Bill Me Later and launched for select Brits in 2014. A nationwide launch has been a long time coming -- why it's taken so long isn't clear, but PayPal insists it had a "successful pilot." In the coming months, we'll see if that success can be replicated on a larger scale.

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