PayPal Inks Deal with Kenyan Bank; CFPB Investigates Bill Me Later (Oct. 28, 2013)
PayPal on Oct. 25 announced a new partnership with Kenya’s Equity Bank to link local merchants with the global online marketplace. Kenya’s e-commerce operators for the first time will be able to hold proceeds from online sales in a local bank account where they may receive payments in 26 different currencies, which are automatically converted to Kenyan shillings. Kenya’s economy is forecast to grow 5 percent annually, and the country also is seeing a surge in e-commerce, according to Efi Dahan, PayPal’s regional director for Africa and Israel. The deal also could position PayPal to become a key remittance channel for Kenyans living abroad, Equity Bank CEO James Mwangi told Reuters during an event to sign the deal.
In other PayPal news, the Consumer Financial Protection Bureau is investigating the eBay Inc.’ unit’s Bill Me Later division for possible credit product violations, the San Jose-based company recently disclosed with its third-quarter earnings SEC filing. PayPal acquired Bill Me Later in 2008; 125 of North America’s 500 largest e-commerce merchants offer Bill Me Later as a convenience to online shoppers, according to Internet Retailer. Bill Me Later enables shoppers to make online purchases and postpone payment for up to six months without paying interest. Purchases customers fail to pay for after six months are subject to a 19.9 percent annual percentage rate, which is added to the purchase balance, plus a $25 late fee.
In its quarterly SEC earnings filing, eBay noted that Bill Me Later is not a bank and instead works with Comenity Capital Bank to issue credit to the consumer and pay the merchant. eBay then buys the receivables from the bank. In the filing, eBay said a lawsuit filed in 2010 alleges Bill Me Later is a true money lender, which would violate various California laws. “Federal regulators could mandate changes to the relationship between us and the issuing banks of the Bill Me Later credit products,” eBay said in its filing, noting the investigation came to light Aug. 7. “[eBay, PayPal and Bill Me Later] take consumer protection very seriously, and are cooperating with the CFPB’s investigation,” a PayPal spokesperson tells Paybefore.
