Online payment service PayPal will offer credit financing with General Electric's GE Money Bank in a bid to win new customers and improve business for merchants that use its service.
PayPal, which is owned by eBay, is facing increased competition from Google's Checkout, which has made a concerted effort to win over businesses that sell on eBay.
The new PayPal service, called PayPal Pay Later, lets online merchants offer a credit account with flexible financing options such as no payments for 90 days.
A PayPal representative said that interest on deferred payments would be shared between PayPal and GE and that rates will 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.