PayPal Expands Buy Now Pay Later: Can it Fuel Growth in 2025?

PayPal Holdings PYPL recently launched PayPal “Pay in 4,” a no-fee, buy now, pay later (BNPL) solution for Canadians. It lets shoppers split purchases from $30 to $1,500 into four equal, interest-free payments over six weeks.

As the holiday season commences, shoppers in Canada can take advantage of flexible payment options across millions of online Canadian and global lifestyle, consumer, and travel brands, just in time for Black Friday, Cyber Monday and Boxing Day.

PayPal’s BNPL solution is a fast-growing payment mode allowing consumers to purchase goods online and pay for them in interest-free installments over weeks or months. In the third quarter of 2025, PYPL’s BNPL total payment volume (TPV) and monthly active accounts grew more than 20% year over year. This makes it on track to process close to $20 billion in BNPL TPV in 2025.

PayPal made some strategic moves in its BNPL business. Last month, the company announced that its U.S. customers will earn 5% cash back on its BNPL online purchases, starting from Oct. 6, 2025, through the end of the year. In September 2025, PayPal also signed a two-year agreement with Blue Owl Capital OWL. In this deal, Blue Owl-managed funds will purchase about $7 billion of PayPal’s “Pay in 4” loans originated in the United States.

PayPal’s BNPL solution is available almost everywhere PayPal is used in its largest markets. PayPal continues to expand BNPL to new geographies and introduce new product offerings, both online and in-store. It expanded BNPL into Canada and extended payment terms in Italy and Spain to up to 24 installments.

How Are Block and Affirm Doing in the BNPL Space?

Block’s XYZ BNPL Gross Merchandise Value (GMV) grew 17% year over year to $9.70 billion in the third quarter of 2025, while Cash App’s gross profit per monthly active rose 25%. Re-payment schedule is strong, with 96% of installments paid timely and 98% avoiding late fees. More than 95% of Afterpay GMV came from returning customers.

Affirm Holdings, Inc. AFRM reported a 52.2% year-over-year rise in total transactions to 41.4 million in the first quarter of fiscal 2026, fueled by a 96% repeat transaction rate. AFRM partnered with ServiceTitan to embed BNPL options in the trades industry. It also launched Affirm pay-over-time at physical store checkouts via Apple Pay on iPhone in the United States.

PYPL’s Price Performance, Valuation & Estimates

Shares of PayPal have declined 21.5% year to date, underperforming both the broader industry and the S&P 500 Index.

From a valuation standpoint, PayPal shares are trading cheaply, as suggested by the Value Score of A. In terms of forward 12-month P/E, PYPL stock is trading at 11.44X, which is at a significant discount to the Zacks Financial Transaction Services industry’s 20.65X.

PayPal’s estimate revisions reflect a positive trend. The Zacks Consensus Estimate for full-year 2025 EPS has been revised upward over the past month. The Zacks Consensus Estimate for 2025 EPS suggests 14.6% growth year over year.

PayPal currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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