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PayPal Aim To Crush Afterpay With ‘Pay In 4’ And No Late Fees

PayPal has launched a very familiar-sounding “Pay in 4” four-part payment instalment option in Australia in a bid to crush Afterpay.

There is one key difference however: PayPal will not be charging late fees, which were responsible for a whopping $70 million in revenue for Afterpay in 2020 alone.

Apple is also planning a similar system, Apple Pay Later, which offers “Apple Pay in 4” and “Apple Pay Monthly Instalments” options. Only the latter will be charged late fees, although there is a possibility that interest will be applied.

“Customers miss payments by mistake, not by design,” PayPal Australia’s head of payments, Andrew Toon, said.

“We think [not charging late fees] is the right thing to do and defines a better customer experience.”

Afterpay currently charges late fees for $10, plus an additional $7 if the account isn’t squared up within a week of the first fee. Late fees are capped at $10 for under $40 purchases, with the lesser of either a flat fee of $68, or 25 per cent of the total cost, for those over $40.

With such hefty competition now entering the ring, Afterpay will no doubt be pressured to rethink this model.

Afterpay, Zip and Sezzle all opened lower this morning, after the news of this increase competition.

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