PayPal offering financing payment options

LOS ANGELES (Reuters) - Ebay Inc's PayPal said on Thursday it would offer credit financing with General Electric Co's GE Money Bank in a bid to win new users and improve business for merchants that use its service.

Online payment service PayPal is facing increased competition from Google Inc's, Checkout, which has made a concerted effort to win over businesses that sell on eBay.

The new PayPal service, called PayPal Pay Later, allows online merchants to offer a credit account with flexible financing options such as no payments for 90 days.

A spokeswoman for PayPal said interest on deferred payments would be shared between PayPal and GE and that rates would be competitive with other private label credit products.

She said the merchants will not pay any additional fees, but will pay the regular PayPal processing fees. Research commissioned by eBay showed that 56 percent of Paypal users are more likely to buy from a retail site if a deferred payment option is available, eBay said.