PayPal Selling $43 Billion in EU BNPL Loans to KKR

PayPal is selling more than $43 billion worth of its European buy now, pay later (BNPL) loans.

The payments company announced Tuesday (June 20) it was selling loans originated in France, Spain, Germany, the U.K. and Italy to investment firm KKR.

According to a news release, KKR will also acquire future originations of eligible BNPL loans, while PayPal remains responsible for all customer-facing activities, connected with its BNPL offering in Europe.

“Buy now, pay later has become a major asset to PayPal’s checkout experience, driving engagement, payment volume growth, and repeat use while delivering high-value customers to our merchants,” said Gabrielle Rabinovitch, PayPal’s acting chief financial officer.

She added that the collaboration will let PayPal accelerate its BNPL organizations “alongside market demand in Europe while preserving free cash flow for other strategic initiatives.”

As PYMNTS reported last month, recent earnings reports from PayPal and other companies that provide BNPL services illustrate that demand.

PayPal itself reported a 70% increase in BNPL volumes year over year, to $6 billion. Block said its BNPL offering generated $5.6 billion in volumes in the first quarter, an 18% year on year increase. Affirm’s growth rate year on year was also 18%.

Meanwhile, PayPal management noted that consumers have been spending 30% more on branded checkout when using BNPL, and that more than 90% of the people using its BNPL service are already PayPal customers.

One of the ways consumers are using BNPL — at least younger consumers — is to pay for groceries, as recent PYMNTS research found.

The PYMNTS and i2c study “ The Credit Economy: How Younger Consumers Make Credit Decisions,” found that more than 1 in 10 BNPL users’ most recent transaction using the payment method was to buy groceries.

Among the surveyed consumers, 15% of millennials who pay via BNPL said that their last such transaction was for groceries, something that was true of 14% of Generation X consumers.

And BNPL providers say they are interested in driving adoption for more kinds of purchases, including groceries.

“Anything that gets back to aligning expenditure with cash flow I think is good for consumers,” PayPal Vice President of Global Pay Later Products Greg Lisiewski said in a PYMNTS TV interview. “And you’ll start to see these solutions penetrate other non-retail verticals.”