PayPal To Take On BNPL Giant Afterpay
Global payments giant PayPal is set to take on Afterpay and Zip with its own Buy Now, Pay Later (BNPL) service.
PayPal today announced the launch of its service ‘PayPal Pay In 4’ in Australia in its latest attempt to hungrily claw back market share from BNPL behemoths such as Zip and Afterpay.
The PayPal Pay In 4 scheme will allow customers to pay off items in four instalments. The BNPL solution will be available at checkout as a payment option in the PayPal wallet and businesses will be able to present the option on their websites.
PayPal, which already has 9 million active users in Australia, will roll out its new BNPL scheme by early June 2021 – just in time for EOFY sales.
Customers will be allowed to borrow up to $1500 in a single transaction and the money will be paid back in four equal instalments without interest. PayPal will charge a $10 fee for any missed payments – capped at $30 for purchases over $125 or $10 for purchases under $125.
Merchants using PayPal Pay In 4 will pay for the service through the fees already paid to PayPal, which is a standard charge of 2.6 per cent plus 30c for domestic transactions.
The company’s General Manager of Payments Andrew Toon told The Sydney Morning Herald PayPal had been ‘inundated’ with requests for a BNPL option from customers for some time.
“They’re looking for us to be able to deliver choice and flexibility to their customers in the PayPal checkout,” Toon said.
PayPal says it counts more than 90 per cent of Australia’s largest retailers and businesses as clients, including Kogan, JB Hi-Fi, Telstra and Canva.
The move will certainly shakeup Australia’s growing BNPL sector. Aussie customers account for a quarter of Afterpay’s total customers and around 40 per cent of Zip’s.
The booming BNPL industry has faced scrutiny in recent months after calls to broaden credit regulations to cover the schemes.
As it stands, BNPL operators fall outside of ASIC’s regulatory power as they do not charge interest to customers.