PayPal Making Credit Lines Available For Holiday Season

In a recent development, PayPal has plans to provide its customers with exclusive credit lines. This comes just in time to take advantage of the holiday spending season. With less money available and many consumers tightening their belts, the program is a bid by the company to expand its online payment division.

PayPal plans to test a service offering a line of online credit to several thousand of its active members. This new service works by tapping into the deferred payment service Bill Me Later Inc., a costly acquisition by parent company eBay. Using this service, web customers may delay their payments rather than paying the bill immediately.

As an incentive, PayPal members shall be eligible for preapproval to a variety o credit limits. Qualification for the line will be based on financial assessments. The credit lines will allow you to access web-based retailers like Apple Inc. and Amazon.com; both are Bill Me Later users. There will be no interest charged and customers will not have to pay for purchases until April 1, 2009. At that point they will be able to use interest-based payment plans.

This new measures is being looked at as a boon to eBay since it is happening while the rest of the e-commerce sector remains virtually at a standstill. Current figures, based off October 2008 estimates, show a 1% increase in online spending; this figure marks the lowest rate of growth in seven years.

With so many signs that global economy will continue to slow, utilizing services like Bill Me Later will provide a better alternative to manage their money rather than paying on credit cards.

With more than 65 million active customer accounts, PayPal’s move is decidedly bold. By trying to include customers from its primary online payment business in its new Bill Me Later program, the company hopes to maintain a competitive edge in an uncertain financial environment.

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