PayPal in turn launches into business loans in France

The boundaries between the banking sector and payment players are constantly blurring. A few weeks after the European payment giant Adyen, it is the turn of the American PayPal to offer a financing service to French companies that use its payment solutions.

Integrated into its platform dedicated to VSEs / SMEs, PayPal Financement Pro promises companies that wish to be able to “obtain financing in just a few minutes” associated with “reimbursements adapted to their activity” in order to “facilitate their growth”, assures the group statement.

“We surveyed our customers, they told us about their difficulties in obtaining financing from traditional lenders, explains to “Echos” Doug Bland, vice-president in charge of credit at PayPal. Among the obstacles, they cite the difficulties in meeting the requirements of financial institutions, the length of the process or the documents to be provided. »

No interest rate

Like Adyen, Stripe or Amazon, PayPal’s promise is based on obtaining an amount of up to 160,000 euros maximum in just a few clicks, without going through the appointment box with an advisor. This service has already been available in the United States since 2013, but also in Australia and Germany since 2018. In total, the group claims to have made 1.2 million loans worldwide for an amount of 22 billion dollars.

To conquer the small business financing market, PayPal has decided not to charge interest rates on these loans and favors a fixed cost calculated for each business. “We have no interest in putting our customers in difficulty, justifies Doug Bland. We benefit from the growth of our customers because it means that they achieve more turnover and therefore more transactions. The group says it does not apply a penalty for late repayment either.

“You have to be careful with this notion of fixed cost, because it can actually represent a significant effective rate,” says a player in the sector. In the market for mini-loans to individuals, several companies have thus been called to order by the regulator for fixed costs which in reality represented an excessive rate.

Nibble the banking market

With this financing offer, PayPal is also nibbling away at a market that until now was almost exclusively in the hands of banks. “We are connected to 34 million companies worldwide, including 10.4 million in Europe, underlines Francis Barel, France PayPal director. We know their needs and we know how to provide them. »

Payment players such as PayPal and its competitors have a veritable mine of information on the health of their customers since they manage their money inflows and outflows for them. “They know their sales, their income, the seasonality of their activity, lists Patrice Bernard, specialist in banking innovation. This is extraordinary information to be upstream of business needs. »

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