Paypal as predicted, comes out with a credit card in the UK. The card is not however attached to their Paypal account.

Finextra: PayPal launches UK credit card

PayPal, the online payments business of electronic auction house eBay, is teaming with finance firm GE Money to launch a credit card in the UK.

The new card does however have features that are aligned to internet users.

PayPal says it will offer instant decisions on online applications,
as well ID theft insurance and guarantees against Internet fraud.PayPal has more than 10 million accounts in the UK.

In an unrelated piece last year, Gartner suggested Banks should work with Paypal, rather than try to compete. While that sentiment is understood, the same piece from Gartner, is somewhat contradictory when it says “Gartner says PayPal’s recently introduced micropayments initiative could also lead to market domination”. To me micropayments are a space Banks should compete in, to ensure the breadth of customers payments needs are addressed.

Gartner says banks should adjust plans to encompass PayPal rather than
hold fast and attempt to compete in the online payments market with
their own outdated payment methods.