Are traditional loans the future of BNPL?

PayPal announced the launch of its “PayPal Pay Monthly” service, which lets customers pay in monthly installments for purchases between $199 and $10,000. WebBank is the lender for the service.

Why should we care?
By letting customers repay on plans that span between 6 and 24 months, PayPal seems be branding a traditional loan as a BNPL offering. That’s not an oversight: Through this new feature, PayPal is one step closer to achieving its superapp ambitions, which would let the payments giant function as a bank. Greg Lisiewski, PayPal's Vice President of Shopping and Pay Later, suggests a superapp may be of particular use to consumers during a downturn. "As the macroeconomic environment continues to evolve, consumers are looking for ways to stretch their finances and have greater control over their purchases," he said. Boasting a large user base, PayPal hopes to use this new service as a way to boost engagement with its services, and it sees BNPL for larger payments as a promising way to do so. "Few consumers could shoulder a pay-in-four commitment for $5,000, but when you extend the term to 24 months, can keep the payment below a manageable $300," said Brian Riley, Director of Mercator Advisory Group's Credit Advisory Service. PayPal’s competitors may follow in its footsteps, moving more of BNPL closer to traditional lending.