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PayPal (PYPL) Unveils Pay in 4, Expands Services Portfolio

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PayPal (PYPL - Free Report) recently unveiled Pay in 4, a buy now pay later installment solution, in a bid to deliver enhanced payment experience to merchants and their customers.

Notably, the new solution enables merchants to allow their customers to make payments for purchases ranging from $30-$600 in four interest free instalments over a period of six weeks.

Further, merchants are not required to pay additional fees for the new solution as it is included in their current PayPal prices.

Additionally, customers can enjoy seamless payment experience via PayPal app in synchronization with their PayPal wallet.

The latest move of the company expands its Pay Later solutions offerings and overall services portfolio. Pay in 4 will be available for use in early fourth-quarter 2020.

We note that the company’s commitment to deliver enhanced user experience through constant strengthening of portfolio has been driving momentum across merchants, which in turn is instilling investor confidence in the stock.

Coming to price performance, PayPal has returned 88.7% on a year-to-date basis, compared with the industry’s rally of 72.2%.


Merchant Momentum to Accelerate

PayPal’s strong efforts to strengthen relationship with merchants will continue to drive business growth.

The recent launch will aid the company in retaining as well as attracting new clients to its platform, courtesy of its customer friendly payment options. Moreover, the service will benefit the clients and their customers as well.

Merchants who are basically the clients of PayPal will get the payment upfront at the time of transaction. Meanwhile, customers will repay the installments.

This seems to be of great help for the merchants as Pay in 4 provides a risk-free payment option to merchants to incorporate into their point-of-sale system. Further, the payment flexibility option will help merchants in bolstering their sales and expanding customer base.

This move will also be socially beneficial.

Notably, all these endeavors will help PayPal to expand client base, which in turn will drive the top line.

Competitive Advantage

The latest move of the company will help it in expanding its footprint in the point-of-sale lending services space. Notably, this space is growing rapidly as these services help customers in purchasing items with the ease of payment installments.

Further, it will help PayPal to gain a competitive edge against Square (SQ - Free Report) , which is also involved in this kind of service.

Notably, Square also offers Square Installments that enables small business clients such as hairdressers, car parts sellers among others to offer the flexibility of payment in installments to their customers.

Customers are allowed to pay for their purchases ranging from $250 to $10,000 in fixed monthly installments over a period of three, six and 12 months.

Nevertheless, PayPal’s growing suite of Pay Later solutions, rising customer engagement on PayPal platform, and flexible financing solutions and products that include the likes of Venmo, PayPal Credit and other alternative payment methods are likely to sustain its strong market position.

Zacks Rank & Stocks to Consider

Currently, PayPal carries a Zacks Rank #3 (Hold).

Some better-ranked stocks that are worth considering in the broader technology sector are F5 Networks (FFIV - Free Report) and Garmin (GRMN - Free Report) . Both the stocks carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Long-term earnings growth rate for F5 Networks and Garmin is currently pegged at 11.5% and 6.8%, respectively.

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