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PayPal Offers Deferred Payment Option

PayPal has launched PayPal Pay Later, a service that allows customers to defer payment for their online purchases. The service, which is already up-and-running in the U.S., is offered through a partnership with Stamford, Connecticut-based GE Money.

PayPal Pay Later allows online merchants to offer customers a transactional credit account with flexible financing options at check-out. Customers do not have to have a PayPal prepaid account in order to use the service and to take advantage of options such as no payments for 90 days, PayPal says.

The new service is a great option for a total purchase of US$50 to US$1,500, and we anticipate it will be a popular choice for larger-ticket transactions and holiday shopping. Margaret Keane, president and chief executive officer of GE Money's Retail Consumer Finance, says in a statement.

The service will be attractive to customers who are worried about identity theft and do not want to enter information online, says Aite Group analyst Adil Moussa. PayPal Pay Later will compete with Bill Me Later from I4 Commerce, which offers a similar service in the U.S., he says.

According to Moussa, I4 Commerce will be forced to change its market strategy in response to PayPal Pay Later. I4 Commerce will need to review its practice of not dealing with merchants who do less than US$25 million in card-not-present transactions, Moussa says.

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