Earlier this week, Paypal introduced a new option for its users to pay for items in installments. This gives users credit and is known as the “Pay in 4” option on the service. This allows Paypal users to buy items with four interest free payments and is a further example of the company’s Pay Later methods. Users are also able to have a credit line through Paypal Credit and also have the ability to make Easy Payments.
The Pay in 4 option allows Paypal users to pay for items that cost between $30 and $600 during a six week period. It is definitely the company’s latest attempt to help those in need during the coronavirus and the no fee policy is an attempt to really get people to start adopting the new practice. Not only is the service free to PayPal users, it will also be free for merchants who offer their products via PayPal.
For instance, under this new system a user would pay $125 four different times over the six week period for an item costing $500, instead of paying the full price at once upon initial purchase.
The way this new service works is that customers make an initial payment and then the following three installments are automated. Customers will be able to see these payments in their Paypal wallets.
This new option is the company’s plan to further the idea that payments can wait for a short period of time as it has done in the past with the Easy Payments option.
This new option is Paypal’s way of competing with other financial services such as AfterPay, Affirm, Klarna and more. These services do not always charge fees upfront, but will often do so if user’s do not pay the amount that is due on time. Klarna offers a very similar service to PayPal’s new program, allowing users to make four payments without any interest, with each new payment coming over a two week period.
PayPal’s strength is that it is already connected to a person’s bank account or card, hence the likelihood that payments are missed are much smaller than many of these competing services. The company will invoke fees, however, if a payment is missed. These fees will differ by the state the user resides in, since PayPal has to follow the rules on a state to state basis.
There will be an onboarding process as new customers will have their credit evaluated by the company before they are able to join the program. Since the payments are fairly small, the company does not see too many customers being turned away from being able to use the Pay in 4 initiative.
Company representatives have maintained that the policy allows customers to have a greater level of flexibility when purchasing products, while PayPal sees the Pay in 4 initiative as another way of drawing in new customers and increasing their sales volume. The Pay in 4 initiative is also a direct appeal to more businesses to use the service in their day to day operations.
The new policies also are an attempt by PayPal to appeal to a younger demographic, which it states prefers the flexibility of installment payments over time.
PayPal has asserted that when businesses use PayPal Credit, they then get a 21 percent boost in sales and also receive an increase in order values of 56 percent.
In recent years, the company has sought to work closely with small businesses as well as basic consumers.
Finally, this initiative comes at the end of the year close to the upcoming holiday season. More consumers are purchasing products through online payments because of the coronavirus pandemic and this is PayPal’s latest attempt to draw them onto their platform.
Anyone using the service for purchases should see the Pay in 4 option available in the near future, and the company is hoping that it also means more small businesses will take notice and include PayPal as a payment method on their respective checkout screens. There is no word yet on whether the PayPal owned Venmo will follow with some sort of similar initiative, but expect both services to continue to offer consumers new ways of exchanging money online moving forward.
