PayPal to of­fer cash-back credit card

Re­wards worth 2 per­cent to ap­pear in users’ wal­lets.

Austin American-Statesman - - MONEY & MARKETS - By Jenny Su­rane and Spencer Soper Bloomberg News

PayPal Hold­ings is turn­ing to its old neme­sis, plas­tic, to help it ex­pand be­yond the dig­i­tal realm.

The on­line pay­ments ven­ture is in­tro­duc­ing a credit card that of­fers cus­tomers 2 per­cent cash back on pur­chases — one of the in­dus­try’s high­est re­bate rates — with no an­nual fee. The re­wards will ap­pear in users’ on­line wal­lets and can be spent im­me­di­ately on ad­di­tional PayPal pur­chases or trans­ferred to a bank.

The move is part of Chief Ex­ec­u­tive Of­fi­cer Dan Schul­man’s ef­fort to trans­form PayPal from a pay­ments but­ton on web­sites into a ver­sa­tile fi­nan­cial tool for ev­ery­day use, even in brick-and­mor­tar stores.

Schul­man has forged 24 deals over the past 18 months with tech­nol­ogy and fi­nan­cial com­pa­nies in­clud­ing Ap­ple, Visa and JPMor­gan Chase & Co., look­ing to make PayPal ubiq­ui­tous in the lives of its 210 mil­lion cus­tomers. The com­pany al­ready tested the card with some of them.

“Not only are they us­ing us to shop out­side of PayPal in the phys­i­cal world but they’re also shop­ping more on PayPal with this card,” said Dar­rell Esch, chief com­mer­cial of­fi­cer for global credit at the San Jose, Cal­i­for­nia-based com­pany. Some cus­tomers be­gan check­ing the bal­ance in their dig­i­tal wal­lets more often, lead­ing to ad­di­tional shop­ping on­line.

By the end of June, be­fore the card’s full roll­out, trans­ac­tions per PayPal ac­count rose 10 per­cent to 32.3 over the trail­ing 12 months, ac­cord­ing to a state­ment from the com­pany.

Among credit-card en­tice­ments, cash-back re­mains king. Al­most 70 per­cent of con­sumers say their fa­vorite re­wards card of­fers such re­bates, ac­cord­ing to a June sur­vey by card pro­ces­sor To­tal Sys­tem Ser­vices.

PayPal’s en­try may chal­lenge Cit­i­group, which of­fers the pop­u­lar Dou­ble Cash card with 1 per­cent back when con­sumers make a pur­chase and another 1 per­cent back when they pay the bal­ance.

PayPal is work­ing with lender Syn­chrony Fi­nan­cial, the largest is­suer of pri­vate-la­bel credit cards, on its of­fer.

“You’re go­ing to see an in­creased fo­cus on cash-back ef­forts,” said Cur­tis Howse, se­nior vice pres­i­dent of Syn­chrony’s di­ver­si­fied client group.

The trick is to keep it sim­ple, he said. “That’s some­thing we’ve been able to do — as a first here — with this part­ner­ship.”

JEFF CHIU / AS­SO­CI­ATED PRESS 2015

PayPal Hold­ings is of­fer­ing a credit card that re­wards cus­tomers with 2 per­cent cash back on pur­chases — one of the in­dus­try’s high­est re­bate rates — with no an­nual fee.

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