PayPal’s €43 Billion BNPL Loan Sale to KKR: Advancing Europe’s Buy Now, Pay Later Market

BNPL loans issued by PayPal in Europe are being sold for more than $43 billion.

A loan sale to investment firm KKR was revealed by the payments company on Tuesday, June 20. The loans were created in France, Spain, Germany, the United Kingdom, and Italy.

In addition, future originations of BNPL loans that meet the criteria will be acquired by KKR. PayPal will continue to be in charge of all customer-facing operations related to its BNPL product in Europe.

According to Gabrielle Rabinovitch, acting chief financial officer of PayPal, “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.”

In Europe, she continued, the partnership will enable PayPal to advance its BNPL businesses “alongside market demand while preserving free cash flow for other strategic initiatives.”

Recent financial results from PayPal and other businesses that offer BNPL services demonstrate this need, as PYMNTS noted last month.

PayPal itself indicated that BNPL volumes increased by 70% from the previous year to $6 billion. Block reported that its BNPL offering brought in $5.6 billion in first-quarter volumes, an 18% year-over-year growth. The year over year growth rate for Affirm was similarly 18%.

In the meantime, PayPal management emphasized that customers who use its BNPL service spend 30% more on branded checkout and that over 90% of them are already PayPal clients.

According to recent PYMNTS data, one of the ways consumers — at least younger consumers — use BNPL is to pay for groceries.

In a study by PYMNTS and i2c titled “The Credit Economy: How Younger Consumers Make Credit Decisions,” it was discovered that more than 10% of BNPL members’ most recent purchase was for groceries.

In the poll of customers, 14% of consumers in Generation X and 15% of millennials who use BNPL reported that their most recent such transaction was for groceries.

Additionally, BNPL service providers said they are eager to promote adoption for additional types of purchases, such as grocery.

“Anything that gets back to aligning expenditure with cash flow, I think is good for consumers,” said PayPal’s Vice President of Global Pay Later Products In an interview with PYMNTS TV, Greg Lisiewski said. And these solutions will begin to spread to other industries besides retail.