PayPal drops late fees for “Pay in 4” functionality

By on August 22, 2021 0

As of October 1, PayPal will no longer charge late fees when customers miss a payment using the PayPal Pay in 4 service. This is the latest development in the increasingly competitive world of payment services. ‘immediate purchase, subsequent payment (BNPL).

Key points to remember

  • Buy Now, Pay Later (BNPL) services make it easier for consumers to shop online and pay for their purchases over time without interest.
  • PayPal’s decision to remove late fees may give it an edge over some competitors.
  • This decision comes as competition in the BNPL world intensifies with large investments and acquisitions.

How PayPal changes ‘Pay to 4’

PayPal’s Pay in 4 service allows users to shop at millions of online stores and pay for their purchases over time rather than immediately.

PayPal launched the BNPL service last year. Pay in 4 divides the cost of a purchase into four equal installments. Users pay the first installment at checkout, then the remaining three at two-week intervals over the next six weeks.

Like other BNPL services, Pay in 4 does not charge interest, but does charge late fees if users miss a payment.

But this will no longer be the case for new purchases from October 1, 2021. This decision corresponds to Affirm, which does not charge late fees on its BNPL service.

Users should keep in mind, however, that missing a payment can negatively affect your credit score if you leave it unpaid for 30 days or more. It could also lead you to be blacklisted by the BNPL service on your future online purchases.

Big investments in Buy Now, Pay Later services

The BNPL online movement is relatively new, but it is growing rapidly. The coronavirus pandemic likely helped, as consumers shifted their spending more toward online shopping, and economic hardships made it more necessary for some to pay over time.

Earlier this month, Square announced the acquisition of Afterpay, another leading BNPL service, for $ 29 billion. Another competitor, Klarna, received a valuation of $ 46 billion in a fundraiser in June.


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