PayPal Australia takes on Afterpay with no-late fee ‘buy now, pay later’ offer


PayPal’s new “buy now, pay later” offering in Australia will not charge late payment fees, the US payments giant has said, as it attempts to edge past main industry rival Afterpay in the country.

The US company’s interest-free BNPL option in Australia, known as “PayPal Pay in 4”, launched last month, has lowered its minimum purchase value to A$30 (approximately $22.44) from A$50, it added.

Afterpay currently charges a default fee of A$10 to customers who miss a payment on their due date and makes provisions for future fines to not exceed the original order’s total. It, however, lets the merchants set their own minimum spend value.

PayPal services more than 9 million customers in Australia and its entry in the fast-growing BNPL space has rattled local players that include Zip Co, Splitit and Sezzle.

These alternative credit firms, which offer small instalment loans to shoppers and make money by charging merchants a commission, face relatively less regulatory hurdles compared with other consumer finance businesses while experiencing a strong uptake amid a boom in online shopping.

PayPal cited a consumer survey commissioned by the company for doing away with the fine, as it found around half the respondents indicated they would not use a BNPL service with “high late fees.”

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“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,” said Andrew Toon, general manager, payments at PayPal Australia.

PayPal said it would instead use the company’s data and analytics and run credit checks with an external credit bureau if required to determine the suitability of “Pay in 4” for a customer.

The team at Platform Executive hope you have enjoyed the ‘PayPal Australia takes on Afterpay with no-late fee ‘buy now, pay later’ offer‘ article. Automatic translation from English to a growing list of languages via Google AI Cloud Translation. Initial reporting via our official content partners at Thomson Reuters. Reporting by Anushka Trivedi in Bengaluru & Byron Kaye in Sydney. Editing by Shailesh Kuber.

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