Online payments company PayPal has muscled in on the Buy Now, Pay Later sector, with its service PayPal Pay in 4.

PayPal’s BNPL offering is squaring off with Afterpay, as the company launches in Australia with no late fees — an element of the business model for which Afterpay has been widely criticised.

According to Andrew Toon, General Manager, Payments at PayPal Australia, “We are launching with no late fees in Australia because we believe it’s the right thing to do for our customers and will deliver a better consumer experience. We are backing the strength of our systems to determine consumer suitability for PayPal Pay in 4 and we believe we have the right measures in place to support our no late fees approach.”

Toon says that the PayPal business model is not designed for consumers that can’t afford it.

Andrew Toon, General Manager Payments, Paypal

“Our business model does not rely on late fee revenues and we believe that many people who miss a payment do so by mistake, not design. By removing late fees, we are providing our Australian customers with a secure buy now, pay later service without the risk of being penalised for late payments.”

With over nine million active accounts in Australia, PayPal is giving its Australian customers the ability to use the service “almost everywhere” that they can already pay with PayPal. It will be made available within PayPal’s digital wallet as a payment option, and can be used to purchase from millions of global online stores. 

PayPal Pay in 4 will allow customers to pay for products between $30 and $1500 in four separate, interest-free payments, at no additional cost to PayPal business customers. 

“Our primary driver is to make the PayPal wallet the most versatile and useful digital wallet available by giving more payment choice and flexibility to our customers while maintaining the highly secure processes they know and trust,” says Andrew Toon.

Research commissioned by PayPal reveals that 55 per cent of Australian online shoppers have not yet used a BNPL, suggesting a large target group for the sector. Meanwhile, 50 per cent of Australian online shoppers cite “high late fees” as the reason. 

According to Tommy Suffren, PayPal’s Consumer Insights Expert, “We’ve seen clear demand from consumers for an easy, secure BNPL service in Australia with no late fees, and we’re responding to that demand.”

“We’re providing Australians with peace of mind knowing they can use a buy now, pay later service on PayPal’s secure platform and will be covered by our Buyer Protection policy for eligible purchases, without the risk of being penalised for late payments.”

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