GigaOM » Bill Me Later

PayPal offers small businesses simple Bill Me Later financing option

Ryan Kim — Tue, 16 Oct 2012 16:01:35 +0000

PayPal is opening up its Bill Me Later service to small and medium online businesses, enabling them to offer free no-interest financing for six months for all purchases of $99 or more. Bill Me Later will give small business owners a way to increase sales conversions and boost order sizes going into the holiday season. And it expands the utility of Bill Me Later to merchants who have never been able to offer instant financing.

For merchants who participate, they will be able to offer Bill Me Later as an option at checkout and will get paid right away from PayPal. There is no upper limit for how much people can finance using Bill Me Later, and the transaction is approved or denied within about one minute. If a consumer takes longer than six months to pay off their purchase, they will pay an annual percentage rate of 19.99 percent.

PayPal is also providing business owners with 18 different types of banner ads that can be easily inserted into their home page or check-out page to highlight the Bill Me Later option.

This should be helpful for consumers who might be a little hesitant to make bigger purchases due to the tough economy. For businesses, offering Bill Me Later could push someone to add a few more items to their shopping carts if they’re short of a the $99 threshold. Forrester Research found that 43 percent of Bill Me Later sales are in addition to regular online sales and offering Bill Me Later boosted average order sizes by as much as 75 percent.

Previously, Bill Me Later was included as a funding source in the PayPal wallet, but it was almost always used by large retailers and enterprise customers. The financing offers were not consistent from one retailer to another. And merchants didn’t have a simple way of advertising the Bill Me Later option.

PayPal has been testing Bill Me Later with some small merchants and some are reporting larger average purchases through the service and a bigger percentage of sales flowing through PayPal as well.

By expanding the use of Bill Me Later, PayPal continues to show how it can become an alternative to traditional credit cards. And it demonstrates how PayPal’s purchase of Bill Me Later in 2008 is now paying off for the online payment giant. Morgan Stanley noted in March that Bill Me Later improves PayPal’s transaction margins because it’s paid off through ACH transfers or check; it generates substantial income through interest and helps eBay monetize its off-shore cash, which it uses to cover Bill Me Later transactions.

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EBay adds invoice payments to PayPal with BillSafe acquisition

Ryan Kim — Thu, 22 Dec 2011 14:19:42 +0000

EBay is continuing its buying spree, snapping up Germany’s BillSafe, a payment-by-invoice provider. The acquisition will be rolled up into PayPal, which made a minority investment in BillSafe last year and collaborated on a joint online invoice payment tool for e-commerce customers. The price was not disclosed.

BillSafe allows customers to purchase a product immediately and pay for it by invoice later. This gives merchants and consumers another way to pay using PayPal. BillSafe is already used by 15 million account holders in Germany, where 19.6 percent of e-commerce transactions were paid by invoice. Paying by invoice is also the most popular form of payment in Austria, Germany, Switzerland and the Netherlands, said BillSafe.

Buying BillSafe adds to PayPal’s suite of tools for merchants who use PayPal. It already has BillMeLater, a service that allows customers to make a purchase immediately and then schedule payments at a later date. It’s a form of credit and it’s being used in PayPal’s new point-of-sale push, as a way for consumers to pay immediately and then change the funding source after a transaction. BillSafe allows PayPal to offer another secure payment option for consumers, who can inspect a product before they pay.

“German customers are extremely security-conscious, and they enjoy the convenience and safety of invoicing when they shop online. One of PayPal’s greatest assets is the security of our system, and we’re glad that we can now offer customers even more peace of mind with a payment method that they already know and prefer and that drives more sales for the merchants,” says Arnulf Keese, managing director of PayPal Germany. “Together with BillSafe, we can offer even more choices to our customers – whether they prefer to pay with their bank accounts, their credit cards or now through purchase on invoice,” Keese adds.

It’s unclear if PayPal will try to offer BillSafe outside of Europe. And it will be interesting to see if BillSafe is packaged up into X.commerce, eBay’s commerce operating system for merchants and retailers. The deal caps off a busy year for eBay, which previously bought Magento, GSI, WHERE, Zong, The Gifts Project and Hunch this year. EBay said the acquisition will not have a material impact on its later financial guidance.

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Will Amazon Ditch Bill Me Later After eBay Takes Over?

Stacey Higginbotham — Mon, 06 Oct 2008 22:30:53 +0000

Today eBay said it would spend $945 million to buy online payment company Bill Me Later, but the folks over at Amazon.com aren’t likely to welcome eBay as Bill Me Later’s new corporate overlords. Amazon holds an equity stake in the payment processing company and is its top customer — with competitor eBay moving to buy it, Amazon has some thinking to do.

Amazon doesn’t have a board seat at Bill Me Later, and as such was probably not involved in the acquisition talks. The question now is whether it will continue to offer Bill Me Later as a payment option. As far as merchants go, Bill Me Later is cheaper than credit cards. But so far Amazon.com, which previously scorned PayPal because of its ties to eBay, has been non-committal about its plans. It said in a statement, “Currently, Bill Me Later is still available as a payment option on our site, but I can’t speculate as to whether we’ll continue to offer them going forward.”

From a payments perspective, eBay has chosen wisely with this buy. PayPal is a debit-oriented program, while Bill Me Later caters to those who are shy about using their credit cards online but don’t want to deal with the hassle of PayPal by offering them credit after they enter their information. While that may seem downright foolish in this economic environment, Bill Me Later investor Mike Kwatinetz of Azure Capital Partners says the company is able to quickly adjust the amount of credit it offers customers.

PayPal has the largest number of the top online retailers using its service, but Bill Me Later has an opportunity to process more transactions, according to data issued last month by research firm Cowen & Co. PayPal’s penetration rate of the top 300 U.S. e-commerce companies rose to 35 percent as of September from 28 percent at the end of last year, but Bill Me Later has $31.6 billion in addressable sales, compared to $26.1 billion for PayPal. Bill Me Later’s top customers (other than Amazon) include OfficeMax, Apple, Newegg, and QVC. Underscoring Amazon’s eBay aversion? All of those merchants also accept PayPal.

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