PayPal, Alliance Data Partner for Instant Credit, In-Store Sales

PayPal plans to fuel the expansion of its in-store payment system by using services from retail card loyalty and marketing company Alliance Data Systems.

Under a multi-year agreement, Alliance Data will become an issuer for Bill Me Later credit products and will maintain a partial interest in the receivables generated under the program. Bill Me Later, which PayPal bought in 2008, provides instant credit for online shopping on a purchase-by-purchase basis.

Alliance Data and PayPal will also develop and test strategies that leverage both companies' services. Merchants that accept PayPal in stores and offer private-label credit cards through Alliance Data will be able to link the two products, allowing their private-label cards to fund PayPal purchases made in stores, online and on mobile devices.

"The relationship between PayPal and Alliance Data marks our strategic entry into a new ecosystem of customer transactions while continuing to drive business growth for our partners' private label credit and loyalty programs," says Melisa Miller, president of Alliance Data Retail Services, in an Aug. 6 release.

PayPal is in the midst of a major push to increase acceptance at physical stores, a move fueled largely by a partnership with Discover it entered last year.