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PayPal Launches Interest-Free ‘Buy Now, Pay Later’ Program

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Key Points

  • PayPal just introduced a new installment credit option called “Pay in 4” for PayPal users.
  • The service is an expansion of the existing Pay Later solutions lineup of PayPal which also includes the revolving credit line of PayPal Credit and its Easy Payments.
  • With Pay in 4, customers can opt to pay for between $30 and $600 over six weeks.
  • Visit The Financial Today’s homepage for more stories.

PayPal just introduced a new installment credit option called “Pay in 4” for PayPal users. The name itself explains what the service offers—it’s the ability for customers to pay for purchases, interest-free, over four separate payments. The service is an expansion of the existing Pay Later solutions lineup of PayPal which also includes the revolving credit line of PayPal Credit and its Easy Payments.

With Pay in 4, customers can opt to pay for between $30 and $600 over six weeks. Because it’s included with the existing PayPal pricing for merchants, they won’t have to pay more fees to offer their clients the option—as they do with several competitive “buy now, pay later” services.

The short-term payment option allows U.S. customers to pay for a purchase over time, with no fees or interest. The remaining three payments are automated after their initial payment. Also, the feature will appear in the PayPal wallet of its users where the payments can be managed.

Pay in 4 builds on PayPal’s tests with Easy Payments. The firm says it learned that customers preferred the option to pay over a six-week period at some price points.

The service is intended to compete with rival fintech companies such as Klarna, AfterPay, Affirm, and others that may or may not charge fees or interest upfront, but often charge late fees when consumers are unable to pay them.

Since PayPal is linked to the payment card or bank account of a customer, the chance of a forgotten payment will be reduced. However, fees will apply if the customer can’t pay. These will vary by state, because each has its own late payment fee structure, according to the company.

“In today’s challenging retail and economic environment, merchants are looking for trusted ways to help drive average order values and conversion, without taking on additional costs. At the same time, consumers are looking for more flexible and responsible ways to pay, especially online,” said Doug Bland, SVP, Global Credit at PayPal, in a statement about the launch.

“With Pay in 4, we’re building on our history as the originator in the buy now, pay later space, coupled with PayPal’s trust and ubiquity, to enable a responsible and flexible way for consumers to shop while providing merchants with a tool that helps drive sales, loyalty and customer choice,” he added.

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