PayPal Offering BNPL Cash Back to Ease Shopper Stress

PayPal is letting American customers earn 5% cash back through its pay later program.

The offering, in effect now for the remainder of the year, is designed to offer PayPal Buy Now Pay Later (BNPL) users more financial breathing room during the holiday shopping season, the company said Monday (Oct. 6).

“Our customers seek payment options that make holiday shopping easier and more rewarding,” Michelle Gill, general manager for small business and financial services at PayPal, said in a news release provided to PYMNTS.

“With cash back on Buy Now Pay Later products, we’re giving them a smarter way to pay and more flexibility to shop the way they want. And for merchants, PayPal BNPL is a proven way to attract more shoppers and increase conversion during the busiest season of the year.” 

In addition to the cash back offering, PayPal is also rolling out Pay Monthly in-store in the U.S., designed to offer users more choice and flexibility in paying over time. This service is set to debut in the coming weeks, the release added.

The offering is happening amid signs that consumers have started their holiday shopping earlier this year, both to avoid higher prices and capitalize on sales events such as Amazon Prime Day.

A report from Bankrate in July said that 49% of consumers had already started their holiday shopping or planned to do so before Oct. 31, with 41% of consumers saying they expect gifts may be more expensive this year. 

“While some consumers shake their heads that holiday shopping seems to start earlier each year, the early start gives you more time to spread out your cash flow and find the best deals,” Ted Rossman, senior industry analyst at Bankrate, said last month.

As PYMNTS wrote last week, research shows that this holiday season will likely be one in which retailers hike prices. A PYMNTS Intelligence survey found that “merchants anticipate boosting prices even further into year-end, reflecting both ongoing supply chain cost pressures and the expectation that consumers will keep spending despite higher price tags.”

BNPL, that report added, has helped sustain the demand in spending, with adoption of pay later plans growing as consumers seek flexible ways to stay on top of their holiday budgets. 

“By spreading payments over time, shoppers are able to absorb higher prices without immediately straining their cash flow,” PYMNTS wrote. “For retailers, BNPL not only supports conversion rates but also encourages larger basket sizes, making it an important tool as costs rise along the supply chain.”

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