As previously reported by eCommerce-Guide.com, PayPal Buyer Credit enables shoppers to sign up for financing for higher-cost items they buy on eBay and elsewhere on the Web, using PayPal. GE Capital Finance is handling the financial backend.

"It basically gives people another option to purchase things," eBay spokesperson Amanda Pires said of the new program, which made its official debut during the eBay Live! 2004 user conference here. "They can purchase, buy now and pay for it when they can, similar to a private-label credit card."

Using PayPal Buyer Credit also extends some important additional benefits to buyers. For one thing, when used on eBay, the program offers full buyer protection.

"Buyers are protected up to the full amount of your purchase for non-delivery, or if items are not as they are described," Pires said.

Sellers also stand to benefit from the launch of the program. Enabling shoppers to pay over time -- rather than all at once -- could make buying high-priced items more economical, boosting sales.

Additionally, the PayPal program enables eBay sellers to prominently highlight promotional financing plans, in which they can specify the terms of the financing offered to buyers of particular items.

"What we've heard from eBay sellers for some time is that they've wanted to offer promotional financing," Pires said. "This allows sellers to offer deferred interest for three to six months, and the sellers get paid right away by PayPal. This really helps to level the playing field for the sellers who are competing with traditional merchants, both online and offline."

Sellers can highlight one of the following plans within their eBay listings:

• No interest if paid in three months, no payments required for three months;
• No interest if paid in six months (monthly payments required)
• No interest if paid in 12 months (monthly payments required)
• Twelve fixed monthly payments at 12.9 percent APR (only available for total purchases over $999, and available only in certain item categories)
• Twenty-four fixed monthly payments at 12.9 percent APR (only available for total purchases over $1,999, and also available only in certain item categories)

Specifying a particular plan spells out the exact monthly amount that a seller would be required to pay -- potentially helping to make the sale.

Buyers apply online to GE Capital Finance for PayPal Buyer Credit before or during their purchase. GE Capital determines credit lines based on a buyer's credit history, and can make a decision in less than 30 seconds, PayPal has said.

The program is only available to sellers in the U.S. and Canada, and those sellers must already qualify to offer PayPal Buyer Protection. Additionally, only U.S. buyers are eligible for the credit program.

PayPal's growing ambitions
The move is the latest by PayPal to encourage use of its payment service. Similarly, the company is also spending considerable effort to boost its presence internationally. In October, PayPal integrated its payment system with eBay in the U.K., and recently launched a fully localized site and buyer protection in Germany.

"International expansion, especially focusing on Europe, is a major focus, especially for the rest of the year," Pires said. " To tailor our service for each market is really a challenge ... but it solves such an important problem in cross-border selling" -- namely, the complex and often costly problem of dealing with currency exchanges.

"Most sellers in the old days didn't even want to take international buyers because they didn't want to deal with the payments systems," she added. Now, using PayPal to handle currency exchange is simpler and often less expensive "than doing some sort of international money exchange. A seller from anywhere can accept any type of payment -- we bridge these disparate payments."

Christopher Saunders is managing editor of eCommerce-Guide.com.