Partnerships / Acquisitions

PayPal Restructures PayPal Credit, Sells Receivables To Synchrony Financial

PayPal announced Thursday (Nov. 16) that it is selling $6.8 billion in receivables to Synchrony Financial.

In a press release, PayPal said it’s selling $6.8 billion in receivables, including $5.8 billion in U.S. consumer credit receivables and about $1 billion in participation interests in receivables held with investors and financial institutions. In addition, the two, who have been partners since 2004, will expand their co-branded consumer credit card deal, and Synchrony Bank will become the exclusive issuer of PayPal’s online consumer financing program in the U.S. for the next decade.

The deal is expected to close in the third quarter of next year, PayPal said in the press release.

For PayPal, selling the receivables means it will lose out on any interest it generates from the loans, but will also give it access to billions of dollars that it can use to grow the business.

“Our expanded relationship with Synchrony Financial will free up cash currently used to fund consumer credit receivables for other uses, while accelerating our ability to deliver engaging credit and payments experiences for our customers. We believe this transaction significantly advances our strategic and financial goals,” said Dan Schulman, president and CEO of PayPal in prepared remarks.

Since 2004, the two have partnered to provide PayPal-branded consumer credit card options that enable both online and in-store payments. The expanded partnership will now include the PayPal Credit online consumer financing program that is offered to PayPal’s U.S. customers.

“This collaboration builds on a key partner relationship in the rapidly growing digital payments space and expands our capabilities within the merchant environment,” said Margaret Keane, president and CEO of Synchrony Financial. “The partnership with PayPal extends our expertise in advanced analytics and underwriting across all digital channels, providing deeper insights into the unique needs of the PayPal customer.”

In a follow-up statement, PayPal noted that merchants who offer PayPal Credit – and consumers who use it – won’t be impacted by the deal. “Our business financing solutions, like PayPal Working Capital, will continue to operate as they do today and we will continue to integrate Swift Financial into our business,” PayPal said.

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