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PayPal Pay in 4 launches – will it dethrone Afterpay?

Liz Seatter avatar
Liz Seatter
- 4 min read
PayPal Pay in 4 launches – will it dethrone Afterpay?

Since publishing, the Federal Government of Australia has announced its decision to regulate the BNPL industry under the National Consumer Credit Protection Act. As a result, BNPL providers in Australia will soon be required to comply with Responsible Lending Obligations and hold Australian Credit Licences. The new regulations may also impact the way BNPL services operate by introducing credit checks for individuals signing up for these services in the future. Additionally, to promote transparency in credit services and safeguard consumer interests, the government plans to prohibit BNPL providers from automatically raising credit limits for customers who have not requested it.

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.

Both Afterpay and PayPal have set a maximum credit limit of $2,000 per customer. When a PayPal customer's credit limit is reached, the Pay in 4 option will no longer appear at checkout.

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

PayPal 'Pay in 4’Afterpay
CustomersAvailable to majority of 9.1 million existing PayPal customers3.5 million in ANZ
Interest chargedNoNo
Account feesNoneNone
Credit checkOnly select customers.No
Individual purchase price$30 - $2,000Up to $1,500
Max credit limit $2,000$2,000
Where you can use itAnywhere PayPal is accepted.Affiliated retailers.
Payment plan4 instalments over 6 weeks.4 instalments over 6 weeks for new customers.
Missed a repaymentPay in 4 account automatically frozen, entire PayPal wallet may be limited.Afterpay account automatically frozen. Late fees apply.
Late feesNone.$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: RateCity.com.au

RateCity.com.au 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

RateCity.com.au 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.


This article is over two years old, last updated on July 14, 2021. While RateCity makes best efforts to update every important article regularly, the information in this piece may not be as relevant as it once was. Alternatively, please consider checking recent personal loans articles.

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Product database updated 23 Jul, 2024

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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