PayPal Holdings is turning to its old nemesis, plastic, to help it expand beyond the digital realm.<\/p>\n
The online payments venture is introducing a credit card that offers customers 2 percent cash back on purchases\u00a0– one of the industry\u2019s highest rebate rates – with no annual fee.<\/p>\n
The rewards will appear in users\u2019 online wallets and can be spent immediately on additional PayPal purchases or transferred to a bank.<\/p>\n
The move is part of CEO Dan Schulman\u2019s effort to transform PayPal from a payments button on websites into a versatile financial tool for everyday use,\u00a0even in brick-and-mortar stores.<\/p>\n
He\u2019s forged 24 deals over the past 18 months with technology and financial companies including Apple, Visa, and JPMorgan Chase & Co, looking to make PayPal ubiquitous in the lives of its 210 million customers. The company already tested the card with some of them.<\/p>\n
\u201cNot only are they using us to shop outside of PayPal in the physical world but they\u2019re also shopping more on PayPal with this card,\u201d said\u00a0Darrell Esch, chief commercial officer for global credit at the San Jose, California-based company.<\/p>\n
Some customers began checking the balance in their digital wallets more often, leading to additional shopping online.<\/p>\n
By the end of June, before the card\u2019s full rollout, transactions per PayPal account rose 10 percent to 32.3 over the trailing 12 months, according to a statement from the company.<\/p>\n
King Cash<\/strong><\/p>\n Among credit-card enticements, cash-back remains king. Almost 70 percent of consumers say their favorite rewards card offers such rebates, according to a June survey by card processor Total System Services.<\/p>\n PayPal\u2019s entry may challenge Citigroup, which offers the popular Double Cash card with 1 percent back when consumers make a purchase and another 1 percent back when they pay the balance.<\/p>\n PayPal is working with lender Synchrony Financial, the\u00a0largest issuer of private-label credit cards, on its offer.<\/p>\n \u201cYou\u2019re going to see an increased focus on cash-back efforts,\u201d said Curtis Howse, senior vice president of\u00a0Synchrony\u2019s diversified client group. The trick is to keep it simple, he said. \u201cThat\u2019s something we\u2019ve been able to do – as a first here – with this partnership.\u201d<\/p>\n
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