PayPal offers 5% cash back on buy now, pay later purchases

SAN JOSE - PayPal (PYPL), a prominent player in financial services with a market capitalization of $66 billion and strong financial health according to InvestingPro, announced Monday that U.S. customers will earn 5% cash back on Buy Now Pay Later (BNPL) purchases made through December 31, 2025, as the company expands its payment options ahead of the holiday shopping season.

The company is also rolling out its Pay Monthly option for in-store purchases in the U.S., giving customers additional flexibility to pay for purchases over time at physical retail locations. The in-store Pay Monthly feature will be available to customers in the coming weeks, though it will not be offered in Alaska, Connecticut, Hawaii or Washington state.

According to PayPal, 60% of shoppers report feeling increased financial stress heading into this holiday season, based on a company-commissioned survey of 1,000 U.S. respondents conducted in September.

To access the cash back offer, customers need to save it through the PayPal app, after which it will automatically apply to eligible BNPL transactions both online and in stores.

"Our customers seek payment options that make holiday shopping easier and more rewarding," said Michelle Gill, General Manager of Small Business and Financial Services at PayPal, in a press release statement.

The Pay Monthly in-store feature will allow customers to apply for a loan amount through the PayPal app. Once approved, they will receive a single-use virtual card that can be added to their mobile wallet and used within 24 hours.

PayPal’s BNPL services require credit approval, with the lender for Pay Monthly being WebBank. The company, which maintains a perfect Piotroski Score of 9 indicating strong financial performance, notes that its BNPL options are designed to help customers manage spending while providing merchants with tools to potentially increase sales during the holiday season.For investors interested in deeper analysis, InvestingPro research indicates PayPal is currently undervalued, with comprehensive financial metrics and additional ProTips available through the platform’s detailed research reports.

In other recent news, PayPal has announced several key developments. Wolfe Research downgraded PayPal’s stock rating from Outperform to Peerperform, setting a year-end 2026 fair value range of $70-$80. This valuation was based on an earnings per share estimate for 2027. PayPal also revealed plans to invest $100 million in startups across the Middle East and North Africa, aiming to expand its presence in these emerging markets. In a strategic move, PayPal has partnered with Google to enhance digital commerce solutions, integrating its payment infrastructure with Google’s AI capabilities. This partnership is set to create new shopping experiences and establish industry standards. Additionally, PayPal launched a new feature called PayPal links, allowing users to send and receive money through personalized links, initially available in the U.S. with plans for international expansion. These developments reflect PayPal’s ongoing efforts to innovate and expand its services globally.

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