In today’s e-commerce world, accepting payments securely from consumers is one of the top priorities for retailers. And guess what’s helping them stay ahead in collecting payments? – Buy Now Pay Later (BNPL).

Modern consumers have welcomed the Buy Now Pay Later (BNPL) trend, and it is continuously evolving. If we believe the reports, the BNPL market is expected to grow at a CAGR of 10.2% between 2025 and 2030.

Amid the increasing popularity of BNPL services, PayPal Credit has been the standout payment option, offering unmatched convenience and security. So, if you are running an online store instead of a traditional brick-and-mortar store, well, you should know how to set up PayPal for your business.

By introducing PayPal Credit as an online payment method, you no longer need to rely on physical cards. However, if you don’t know whats PayPal Credit and how to use PayPal Credit to send money, let us help you uncover everything in this blog.

What is PayPal Credit?

PayPal Credit refers to a reusable line of credit, which is akin to a credit card but without the physical piece of plastic. PayPal Credit is linked to your PayPal account in such a way that you can make online purchases even if you don’t currently have the money.

Basically, it’s a payment method you can use at multiple retailers, where you buy an item first and pay for it later.

Like a traditional credit card, you can choose PayPal Credit as your payment option at checkout to complete a purchase. The best part is, you don’t have to pay it back immediately if your purchase is $99 or more.

You get up to 6 months to repay without extra charges. This means you pay interest only if the balance still remains unpaid after 6 months.

Now that you know what is PayPal Credit, it’s time to learn how PayPal Credit works.

How Does PayPal Credit Works?

You can utilize PayPal Credit when buying goods or sending money to another PayPal user. Below is the step-by-step explanation of the PayPal Credit working process.

  • Firstly, you need to apply for PayPal Credit.
  • Upon approval, credits are added to your PayPal account. There won’t be a physical card.
  • Start purchasing products at any online portal where PayPal is accepted as a payment method.
  • Now, choose PayPal Credit to complete the payment (of at least $99 or if less than $99, you need to pay the minimum interest charge, i.e. $2).
  • The moment the merchant gets paid, the same amount will reflect in your PayPal Credit balance.
  • Later, you can repay the amount at any time within 6 months (only for purchases over $99).
  • In case you wish to send money via PayPal, log in to PayPal, select ‘Send Money’, and choose PayPal Credit while initiating the payment.

💡Also Read:

How to Send an Invoice on PayPal

How to Apply for PayPal Credit?

Alright, referring to the above steps, you might be wondering how to apply for PayPal Credit, aren’t you? Let us clear your doubts.

  • Visit the official PayPal website and sign in with your credentials.
  • Now, get the PayPal Credit option, located under financing options on your dashboard.
  • Hit the “Apply Now” button and then start filling in the details like name, address, income, and SSN in the application form.
  • Once done, submit the application and wait for the approval. This process might take only a few minutes.
  • Following the approval, you can start online shopping using PayPal Credit.

Payment Tracking is Now Painless

Start managing invoices and payments on Moon Invoice, where you can track payment and invoice status without any manual effort.

Grab a Free Trial

How Do You Use PayPal Credit?

When approved, your PayPal Credit can be used at checkout, where merchants allow the PayPal option.

Local Store

Unfortunately, PayPal Credit isn’t a plastic card that you can swipe at physical stores. So, you can no longer use it physically while purchasing an item from your nearby stores. However, if the store owner accepts PayPal payments, you can ask them for a QR code from the PayPal app. After scanning the QR code, you can select a PayPal Credit and complete the payment.

Online Store

PayPal Credit is relatively easier to use at online stores than in brick-and-mortar stores. Simply, add the item to the cart, and choose PayPal at the time of checkout. Then, log in to the PayPal account and select PayPal Credit among the different available options. That’s how you can complete the payment online using PayPal in a few steps.

What is Margin Holdings Limited PayPal Charge on Credit?

Margin Holdings Limited isn’t a charge from PayPal, but rather an indication of unauthorized billing. This could be a part of fraudulent practices. So, when the user notices unauthorized charges on your PayPal account, the first thing they should do is report the issue through PayPal’s Resolution Center. The user can turn off the recurring (automatic) payments for a while and inform the merchant to temporarily inactive their subscriptions.

What are the Benefits & Drawbacks of PayPal Credit?

While PayPal Credit comes with plenty of benefits, it also has some negatives that should not be overlooked. Let’s see what are they.

PayPal Credit Benefits

  • Quick credit approval for using PayPal Credit
  • The user is given a 6-month grace period to settle the outstanding dues.
  • Make instant purchases anywhere using PayPal Credits.
  • There isn’t any annual fee for using PayPal Credit.
  • Ideal option for recurring payments like utility bills
  • It offers cashback to users at selected outlets.

PayPal Credit Drawbacks

  • PayPal is not accepted at local stores.
  • It’s not a good option for long-term financing.
  • If you miss a payment, your credit score takes a hit.
  • PayPal will charge you high interest if the due date is missed.
  • Customer disputes can be lengthy and tedious.

💡Must Read:

How to Receive Money on PayPal

Integrate PayPal With Moon Invoice & Get Paid in Minutes

Offering a PayPal payment could be easy. But what if you can dispatch invoices with a PayPal option? Sounds great? With Moon Invoice, you don’t have to create a physical invoice copy separately. You can generate a paperless invoice with an in-built PayPal payment option and dispatch it to your client in a fraction of a second.

Absolutely, our AI-ready invoicing software, Moon Invoice, takes the invoicing and payment hassles out of your business so that you can focus on what’s more important. It consists of 20+ payment integrations such as Stripe, PayPal, Apple Pay, Cash App, and more. You can integrate any one of them with an invoice and get yourself paid within minutes.

Here are some notable Moon Invoice features worth exploring.

  • Customizable invoice templates
  • AI-powered expense receipts (Quick Scan)
  • Expense management
  • Cashless payments
  • Credit notes
  • Dedicated vendor portal
  • Time tracker
  • Auto-generated financial reports
  • Cloud storage

Collect Payments 2x Quicker With Moon Invoice

Create paperless and professional-looking invoices that get paid without any back-and-forth, speeding up your payment collection.

Create Invoices at $0

Wrapping Up

PayPal Credit is a great “Buy Now, Pay Later” option when doing online shopping. With PayPal Credit, you no longer need to carry cash in your pocket or recharge your digital wallet. Just choose PayPal at checkout time and send money instantly. However, it’s important to repay the amount before the interest-free period expires. Otherwise, PayPal credit fees will ask you to pay more.

For retailers and small businesses, accepting PayPal payments can be a smart move in a bid to get paid on time. They can encourage customers to go cashless with PayPal Credit and collect payments without any delay. This seamless process not only fuels customer satisfaction but also helps expand their reach to a wider audience.

PayPal Credit FAQs

Jayanti Katariya
Jayanti Katariya About the author

Jayanti Katariya is the founder & CEO of Moon Invoice, with over a decade of experience in developing SaaS products and the fintech industry. He holds a degree in engineering. Since 2011, Jayanti's expertise has helped thousands of businesses, from small startups to large enterprises, streamline invoicing, estimation, and accounting operations. His vision is to deliver top-tier financial solutions globally, ensuring efficient financial management for all business owners.