GE Money Bank has replaced Washington Mutual Card Services as the issuer of PayPal Inc.’s credit cards.
The agreement expands PayPal’s relationship with the General Electric Co. subsidiary, which since 2004 has offered PayPal Buyer Credit, an instant line of credit that people use for PayPal purchases.
Amanda Pires, a PayPal spokeswoman, said Wednesday that the new card, PayPal Plus, has been available since Friday and that the eBay Inc. unit stopped working with Washington Mutual Card Services at the end of April.
Because of Buyer Credit, PayPal knew what GE “had to offer,” Ms. Pires said.
The PayPal Plus card has a MasterCard logo and some features the Wamu card lacked, including a rewards program and the ability to check the card’s balance from PayPal.com. PayPal, which is based in San Jose, also began offering a different GE-issued credit card to customers in the United Kingdom last month.
Though the card is available to anyone, Ms. Pires said it offers the most perks to businesses that use PayPal. For many online businesses, PayPal “is a primary source of funds, both in the online and offline world,” she said. Allowing them to sign in to their card accounts through PayPal.com is “an added benefit; this would be a one-stop shop.” (When PayPal Plus cardholders sign in through PayPal.com, they are redirected to a GE site to manage their card accounts.)
The switch comes shortly after the cancellation of an eBay affinity card MBNA Corp. had issued since 2003. That relationship ended soon after Bank of America Corp. bought MBNA in January, and Ms. Pires said the move had nothing to do with PayPal’s decision to switch to GE.
The GE card is not a direct replacement for the Wamu card; customers with the old card will remain customers of Washington Mutual Card Services. Anyone who wants the rewards and single sign-on benefits of the new PayPal card must apply for the PayPal Plus card. (The old card’s former issuer was Providian Corp., which was sold to Washington Mutual Inc. in October 2005.)
Applicants who do not qualify for the PayPal Plus card may receive a Buyer Credit account instead, and Buyer Credit customers cannot upgrade their accounts to PayPal Plus card accounts.
Buyer Credit can be used only through a PayPal account, and all transactions are monitored by PayPal’s fraud detection system. PayPal Plus transactions are monitored by GE.
The PayPal Plus card is not linked to PayPal’s debit card. Merchants can use the debit card to access funds stored in their PayPal accounts. People cannot pay their PayPal Plus card debt directly from their PayPal accounts.
Merchants can offer buyers the same incentives through the PayPal Plus card as they do through Buyer Credit, such as not charging interest for a period of time, Ms. Pires said.
Dan Schatt, a senior analyst for the Boston market research firm Celent LLC, said that making card account information available on the PayPal Web site will “definitely be a plus.”
“Usually, with affinity cards, you cannot check your balance” through the company whose brand is on the card, Mr. Schatt said. Allowing people to do so, he said, “keeps the consumer coming back” to the Web site.
Gwenn Bezard, a research director at Aite Group LLC of Boston, said switching to GE makes sense because it adds consistency to PayPal’s credit products. In addition, he said, GE is making a push in the private-label card market, which may have prompted it to make PayPal a better offer than Washington Mutual.
The card is clearly aimed at the small-business market, Mr. Bezard said. “PayPal is increasingly competing with banks for small-business cash management,” he said. He noted that PayPal’s debit card is not even offered to consumers.
PayPal has little reason to let customers pay their credit card balance from their PayPal accounts, Mr. Bezard said. “If they don’t offer it, maybe that makes sense,” he said. “PayPal wants you to have as much money as possible in your stored-value account.”
Connecting the two accounts in this way “is kind of a losing proposition,” he said.
