PayPal has closed to deal of selling its consumer credit division to Synchrony Financial. The transaction, that totaled USD 7.6 billion in receivables, is part of an expanded relationship between the two companies.
Synchrony will acquire PayPal’s consumer credit, including the USA division, totaling USD 6.8 billion, and a participation interest held by unaffiliated third parties, valued at USD 0.8 billion. The first agreement closed by the two companies in November 2017 valued the transaction at USD 5.8 billion.
The companies are in a partnership since 2004 to offer PayPal-branded credit cards, that allow users to shop online and in stores. Now, as part of the deal, the companies have extended to 2028 their credit card program involving the PayPal Extras Mastercard and PayPal Cashback Mastercard.
PayPal loses the interest that the loans generate, but it is a part of the company’s strategy to make some billion in cash that can be used in other ways to grow the business. Including for acquisition, something that the company has already done after buying iZettle in May for USD 2.2 billion and Hyperwallet in June for USD 400 million.
“We’re pleased that we’ve completed the sale of our U.S. consumer credit receivables portfolio,” said Dan Schulman, president and CEO of PayPal, in a statement cited by TechCrunch.com. “Our agreement with Synchrony accomplishes every goal we set out for our asset light strategy. We look forward to working with Synchrony to double down on our innovative consumer credit experiences for our customers and profitably grow the portfolio over time.”