PayPal is finally selling its consumer credit portfolio to Synchrony Financial, the U.S. based consumer financial service provider, in a deal worth USD 7.6 billion. The deal reportedly encompassed PayPal’s extensive consumer credit receivables, closing at USD 6.8 billion and unaffiliated third parties’ participation interest of around USD 0.8 billion. However, PayPal approximately received around USD 6.9 billion in a total consideration at the closing time.
For the record, the deal was initiated in November 2017, when the online payment giant agreed to sell its consumer credit portfolio to Synchrony for USD 5.8 billion back then, by virtue of the long standing cordial relationship between both the companies that dates back to 2004. In fact, the partnership between the two enabled PayPal users enjoy online shopping via PayPal-branded credit cards.
Sources claim that as a part of the recent deal, both the companies have extended their credit card agreement program that involves PayPal Cashback Mastercard and PayPal Extras Mastercard, till 2028. In addition to this, it has been also reported that Synchrony would now be the only exclusive provider of PayPal Credit online consumer financing program in America till 2028.
The CEO of PayPal, Dan Schulman seems to be highly optimistic about extending the deal with Synchrony and has been quoted saying that the company is anticipating to double its innovative consumer credit experiences by tying up with Synchrony. Experts believe that this is a strategic move by the giant to enhance the company’s portfolio and profitability over time.
Reportedly, both the companies’ stock price went up as the news came to the fore. While PayPal’s price has risen up by 0.7%, Synchrony’s shares rose by 0.6%. It has been also confirmed that Synchrony would further update the financial impact of the transaction in the second quarter of this year’s earnings call.