eBay’s PayPal Is Looking to Increase Its Loan Limit
eBay and Amazon Continue to Innovate in the E-Commerce Market
PayPal is raising the loan limit for PayPal Credit
The loan business is becoming a big business for payment processing firms like eBay’s (EBAY) PayPal. According to a report from the Wall Street Journal, PayPal has plans to raise the highest loan limit from $65,000 to $85,000. PayPal calls this business “PayPal Credit.” Although this is a small business for PayPal, it’s a growing business.
A few months ago, PayPal rolled out installment credits with Apple (AAPL) online in the United Kingdom and Germany (EWG). This PayPal plan allows customers to pay for purchases in equal monthly installments for up to 18 months with no interest. As a result, Apple is able to provide its customers with more flexibility and choices. Previously, PayPal payment options were only available in Apple’s app and content stores.
PayPal will face bigger competition after its split with eBay
As a whole, PayPal’s business continues to show strong growth. As the above chart shows, although PayPal’s YoY (year-over-year) revenue growth did slow down a bit in 1Q15, it was mainly due to the strong US dollar. Without the currency issues, PayPal’s revenue growth could have been 17%.
eBay and PayPal are also in the process of completing their separation. During the 1Q15 earnings conference call, eBay’s management said that it expects the separation process between eBay and PayPal to be complete by 3Q15. Management also mentioned that after the split, both eBay and PayPal will have to abide by certain rules. We discussed this aspect in eBay and PayPal Will Be Tightly Integrated Even after the Split.
After the split with eBay, PayPal will need to continue to innovate because the competition from Apple and Google (GOOG) is rising quickly in the mobile payments space. Recently, Apple Pay Beat PayPal and Google in In-Store Mobile Payments. Even Microsoft recently entered the mobile payments platform space. Although Microsoft (MSFT) hasn’t made any product announcements, Windows 10 now enables mobile payments.
Browse this series on Market Realist:
