Following UK merchant financing program, PayPal plans U.S. test
SAN FRANCISCO, April 3 (Reuters) - EBay Inc's payments business, PayPal, already lends money to online shoppers, but it is now starting to finance the merchants who sell on the company's online marketplaces.
PayPal has already tested a financing program for eBay sellers in the U.K. and it plans similar tests in the United States this year, a company spokesman said on Tuesday.
"Marketplaces is a great innovation lab for us to test new experiences," Gary Marino, senior vice president, global financial services at PayPal, said at eBay's investor day last week. "We've done it successfully with credit and we are experimenting with many new capabilities which will drive share like small business lending."
The U.K. program and the up-coming U.S. test focus on merchants selling on eBay.com, which number in the millions. The PayPal spokesman declined to say how many of these sellers it was targeting with the new financing.
Banks and other providers of loans for merchants pulled back in the wake of the 2008 financial crisis, leaving an opening for alternative sources of financing. Factoring, a common source of financing in the retail business that is provided by lenders such as CIT Group and Wells Fargo, can be tough to tap for smaller merchants.
The combination of fast-growing online shopping and a lack of credit for smaller businesses has created strong demand for new types of financing among sellers that ply their trade on Amazon.com, eBay.com and other marketplaces.
