PayPal Lets Small-Merchant Shoppers Buy Now, Pay Later By extending its 'Bill Me Later' option to customers of small and medium businesses, PayPal gives owners another way to encourage shoppers to spend.

By Brian Patrick Eha

entrepreneur daily

Opinions expressed by Entrepreneur contributors are their own.

Small-business owners who use PayPal to process their online purchases are getting a gift this holiday season: another way to encourage shoppers to spend. The online payment powerhouse has extended its Bill Me Later program, allowing customers of small and medium online businesses to finance purchases of $99 or more.

Merchants whose customers choose the Bill Me Later option are paid immediately by PayPal, while customers receive no-interest financing for six months -- pending credit approval by Salt Lake City-based lender WebBank. This means that customers who might be low on cash now have an incentive to spend a little more in order to cross the $99 threshold.

Related: What PayPal's Partnership With Discover Means to Business Owners and Consumers

"It looks like any other PayPal transaction to the merchant -- they still get paid right away, don't pay any additional costs, and don't assume any credit risks," says Peter Karpas, PayPal's vice president and general manager for small and medium businesses in North America. Should a customer fail to pay off a purchase within six months, PayPal says it will charge that person interest at an annual rate of 19.99 percent.

The Bill Me Later service, which PayPal acquired in 2008, is already available in the PayPal wallet, but had been accessible only by larger merchants. According to a July 2012 study by the research firm Forrester, participating merchants saw a 5.7 percent sales increase over a three-year period.

"We're rolling this initiative out in time to give small businesses a growth boost during the holidays when shoppers can be low on cash," Karpas says. Small-business owners who want to advertise this new payment option to customers can install website banners provided by PayPal.

Related: 5 Ways to Turn Your Website into a Sales Machine

PayPal's decision to make Bill Me Later available to its small- and medium-size business clients appears to be an effort -- at least in part -- to maintain an edge over mobile and online-payment competitors such as Square, which doesn't offer a financing option.

Do you think PayPal's Bill Me Later option is a good thing for online business owners? Let us know in the comments below.

Brian Patrick Eha is a freelance journalist and former assistant editor at Entrepreneur.com. He is writing a book about the global phenomenon of Bitcoin for Portfolio, an imprint of Penguin Random House. It will be published in 2015.

Want to be an Entrepreneur Leadership Network contributor? Apply now to join.

Editor's Pick

Related Topics

Thought Leaders

10 Simple, Productive Activities You Can Do When You Aren't Motivated to Work

Quick note: This article is birthed out of the urge to do something productive when I am not in a working mood. It can also inspire you on simple yet productive things to do when you're not motivated to work.

Business Solutions

Stay Organized with This Task Management Tool, on Sale for $30

A Study Planr Pro subscription is just $30 for life.

Business Ideas

55 Small Business Ideas to Start in 2024

We put together a list of the best, most profitable small business ideas for entrepreneurs to pursue in 2024.

Devices

Get a 15-inch MacBook Pro for Less Than $375

Save on this refurbished MacBook Pro for a limited time.

Data & Recovery

Get 2TB of Cloud Storage with PhotoSphere for Just $280 for a Limited Time

Easily store and access photos, videos, and other files spread across your work devices.

Business News

Here Are 3 Strategies Startup Founders Can Use to Approach High-Impact Disputes

The $7 billion "buy now, pay later" startup Klarna recently faced a public board spat. Here are three strategies to approach conflict within a business.