PayPal Pay in 4 launches – will it dethrone Afterpay?

PayPal Pay in 4 launches – will it dethrone Afterpay?

Payments giant PayPal has today launched its buy now pay later service ‘Pay in 4’ which has been automatically rolled out to most of its 9.1 million Australian customers.

Afterpay is the current buy now pay later market leader in Australia with 3.5 million active users on the books.

How does PayPal Pay in 4 compare to Afterpay

Although they have many similarities, one of the biggest differences from Afterpay is Pay in 4 will not charge any late fees. Existing merchant fees will remain the same.

However, PayPal will report customers who default on repayments to the credit bureau, something Afterpay currently does not do. PayPal may also conduct a credit check on some customer, before giving them access to the Pay in 4 option.

While Afterpay has a maximum credit limit of $2,000 per customer, PayPal has no set maximum and instead will give customers individual credit limits. Customers won’t be told what their exact limit is, however, the Pay in 4 option will no longer appear at checkout once their limit is reached.

PayPal has not signed up to the self-regulated industry code of practice.

  PayPal 'Pay in 4’ Afterpay
Customers Available to majority of 9.1 million existing PayPal customers 3.5 million in ANZ
Interest charged No No
Account fees None None
Credit check Only select customers. No
Individual purchase price $30 - $1,500 Up to $1,500
Max credit limit Not disclosed. $2,000
Where you can use it Anywhere PayPal is accepted. Affiliated retailers.
Payment plan 4 instalments over 6 weeks. 4 instalments over 6 weeks for new customers.
Missed a repayment Pay in 4 account automatically frozen, entire PayPal wallet may be limited. Afterpay account automatically frozen. Late fees apply.
Late fees None. $10 per missed payment, plus $7 if not paid within 7 days. Late fees capped at 25% of the purchase price or $68, whichever is lower.

Source: research director, Sally Tindall, said: “PayPal might be entering a crowded market but it’s coming in with an existing customer base of over nine million Australians. That’s going to count for a lot.”

“With millions of people to market to, and with a new zero fee proposition, this new platform is likely to be a serious contender in the buy now, pay later space,” she said.

“However, PayPal customers who miss repayments should be aware, if you default, it could end up on your credit file.

“The big question is whether PayPal’s new service will prompt people to switch buy now, pay later providers or encourage them to use multiple platforms at once.

“ASIC’s most recent report into the sector found people getting into trouble using buy now, pay later were more likely to have multiple accounts.

“With over 20 buy now, pay later services now in the market, customers can easily rack up a slew of debts across a number of platforms.

“What we need is better regulation. Many buy now, pay later providers don’t know how much people earn or how many existing debts a customer has and that’s often part of the problem.

“The market is likely to continue heating up with Commbank’s Step Pay set to launch soon. Other big payment giants likely to pile in, with Apple reportedly working on its own BNPL service in the US,” she said.

Buy now pay later boom – 20+ platforms now available in Australia analysis of the buy now pay later industry in Australia shows there currently 21 different platforms, when CBA launches Commbank StepPay soon there will be 22.

How to avoid getting into trouble using BNPL platforms:

  1. Read the terms and conditions and understand what fees you could get hit with.
  2. Set yourself strict spending limits.
  3. Limit yourself to one platform, and one purchase at a time.
  4. Don’t impulse buy. Sit on any major purchases for at least 24 hours.
  5. If you get into trouble, pull the pin and call for help. Each platform should have a hardship policy to help you get out of trouble.

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Fact Checked -

This article was reviewed by Research Director Sally Tindall before it was published as part of RateCity's Fact Check process.



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The lower your score, the more likely you are to be denied a loan or forced to pay a higher interest rate.

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It can be hard to improve your credit score, as it usually requires sacrifice and discipline, but hard doesn’t necessarily mean complicated. Some simple ways you can give your credit score a boost include closing extra credit cards, reducing your credit card limit, pay off any loans and make loan repayments on time.

As a general rule, the lower your credit score, the more remedies you can apply and the greater the scope for improvement.

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A fixed rate personal loan keeps your repayments consistent, which can help keep your budgeting consistent. You won't have to worry about higher repayments if your rates were to rise. However, on a fixed loan you’ll also potentially miss out on more affordable repayments if variable rates were to fall.

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