The news: PayPal will make its Pay Monthly installment loans  available in-store in the US ahead of the holiday season. 

Users can apply for their desired loan amount in the PayPal app. Once approved, they’ll receive a single-use virtual card which they can add to their preferred mobile wallet for a purchase within 24 hours.

US consumers can also get 5% cash back on all eligible in-store and online purchases made with PayPal’s buy now, pay later (BNPL) loans through year’s end by saving the offer in the PayPal app.

Why this matters: US consumers feel jittery about holiday shopping in light of tariffs and general economic uncertainty. Almost half (47%) of seasonal gift shoppers are planning to pare back on shopping or spend less due to tariffs, with the majority of Gen Zers (54%) electing to cut back, per a July 2025 CivicScience poll. 

BNPL offers can help these nervous holiday shoppers navigate their spending in a way that feels more sustainable than placing purchases on revolving credit—a payment method that gives 51% of Gen Zers the “ick.”

A play for Gen Z: BNPL offers jive well with young consumers. In August, 16.3% of 18- to 34-year-olds used the payment method—five percentage points higher than any other generational cohort. 

By starting the promotion now, PayPal also gets an early crack at Gen Zers’ plans to shop early for the season: 24% of Gen Zers plan to turn out earlier to capture deals before tariffs cause prices to rise.

PayPal and Venmo’s partnership with Perplexity may also boost holiday volume, especially with younger cohorts: 56% of Gen Zers believe AI tools are valuable for holiday shopping, per Salsify’s 2025 Holiday Pulse Report. 

Our take: PayPal’s promotion taps into young consumers’ desires for deals, payment flexibility, and promotions. 

For competing BNPL providers, PayPal’s rewards structure now far outstrips what most of them offer. Competitors should consider more strategic partnerships with desirable Gen Z and millennial brands to strike directly at the root of where young consumers are shopping, and cut deals with those merchants for more favorable cash-back rewards.

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