PayPal Sells €BNPL Loans Valued at $43B

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PayPal has unveiled plans to sell loans generated in several European countries to investment firm KKR, signaling a strategic move amid the burgeoning “buy now, pay later” (BNPL) trend. The loans, originating from France, Spain, Germany, the United Kingdom, and Italy, will be acquired by KKR, with future originations also on the horizon. Despite this transition, PayPal remains committed to overseeing all customer-facing operations for its BNPL product across Europe.

Gabrielle Rabinovitch, acting chief financial officer of PayPal, underscored the significance of BNPL in enhancing PayPal’s checkout experience. She emphasized BNPL’s role in driving engagement, fostering payment volume growth, and cultivating repeat use, all while attracting high-value customers to merchants. Rabinovitch expressed confidence in the partnership with KKR, envisioning an expansion of PayPal’s BNPL operations in Europe to meet market demand while maintaining free cash flow for other strategic initiatives.

Recent financial data from PayPal and other BNPL providers underscores the imperative for such initiatives. PayPal reported a notable 70% surge in BNPL volumes from the previous year, amounting to $6 billion. Similarly, Block’s BNPL offering witnessed a substantial 18% year-over-year growth, raking in $5.6 billion in first-quarter volumes. Affirm also experienced an 18% year-over-year growth rate.

Moreover, PayPal management highlighted compelling insights into customer behavior regarding BNPL usage. Customers leveraging PayPal’s BNPL service were found to spend 30% more on branded checkout, underscoring the value of BNPL in driving higher transaction values. Furthermore, a significant majority, over 90%, of BNPL users were existing PayPal clients, indicating a seamless integration of the BNPL offering into PayPal’s existing ecosystem.

The decision to sell BNPL loans to KKR aligns with PayPal’s strategic vision to capitalize on the growing popularity of BNPL while optimizing its operational efficiency. By leveraging KKR’s expertise and resources, PayPal aims to enhance its BNPL offerings, catering to evolving consumer preferences and market dynamics across Europe.

In conclusion, PayPal’s strategic move to sell BNPL loans underscores its commitment to innovation and growth in the dynamic fintech landscape. With BNPL emerging as a key driver of customer engagement and revenue growth, PayPal’s collaboration with KKR signals a strategic alignment to capitalize on this trend and drive sustained value for both merchants and consumers.