PayPal is introducing a new way to spread out the cost of purchases without merchants or consumers incurring any additional charges.
As TechCrunch reports, the new installment credit option for US consumers is called "Pay in 4" and it allows purchases of between $30 and $600 to be paid in four installments over a six week period. Merchants are being encouraged to use it because there's no additional charges by PayPal for supporting the option beyond what they already pay in transaction fees.
For consumers, the four payments are interest-free and automatically taken, so there should be no extra costs involved. However, if for some reason an installment payment is missed, a late fee will be charged which varies per state.
"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. "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."
PayPal is thought to be reacting to similar payment plans already offered by services such as Klarna and AfterPay. The huge customer and merchant base PayPal enjoys combined with the lack of extra fees and interest-free payments are sure to make Pay in 4 a popular option, especially as we head into the holiday season.
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