PayPal launched a new service for ecommerce websites called PayPal Pay Later that allows merchants to offer promotional financing to shoppers. Buyers that choose the promotional offer can defer payments for purchases on participating merchant websites, allowing them to "shop now and pay later." The service is similar to Bill Me Later, which is offered through CIT Bank and managed by I4 Commerce Inc. (http://www.i4commerce.com/i4Commerce/Content.do?pageID=42).

The PayPal Pay Later service allows online merchants to offer a transactional credit account with flexible financing options to buyers at check out - even if a buyer doesn't have a PayPal account. PayPal Pay Later's first offering, which gives buyers "no payments for 90 days," is free for merchants, who receive 100 percent of the money immediately upon completion of a transaction. PayPal will offer merchant-customizable options in the future in which merchants would pay some fees.

PayPal spokesperson Amanda Pires said the company may offer the service on eBay in the future. Currently PayPal offers Buyer Credit on eBay, which is different from Pay Later.

The pitch to merchants from services such as Bill Me Later and PayPal Pay Later is that they can improve conversion rates by making it easy for shoppers to make a purchase and pay later, without the necessity of entering credit card information on websites.

Pires said there are some differences between the PayPal Pay Later and the Bill Me Later service, one being that PayPal is offering promotional financing to merchants of all sizes, not just large merchants. She also cited the benefits of using one online-payment provider, allowing merchants to avoid integrating offerings from multiple providers. And, she said, "Consumers can use PayPal like an online wallet to pay in many ways including: bank accounts, debit cards, credit cards, account balances and other financial products including PayPal Pay Later."