(Australian Associated Press)
PayPal will offer a buy now, pay later service to Australians from June as it tries to catch up with the likes of Afterpay and Zip.
The payments provider, known for securing sales on eBay, on Wednesday said the users of Australia’s 9.1 million PayPal accounts would be able to pay in four instalments.
The new service will be available in a shopper’s PayPal wallet at checkout for purchasing from businesses around the world including Airbnb, Coles, JB Hi-Fi, Qantas, Telstra, Uber and Woolworths.
Like many competing services, shoppers will not be charged interest but will have a late fee deducted if they miss a payment.
This late fee will be $10 for purchases less than $125, and $30 for those worth more than $125.
Like other providers, PayPal said these late fees would only be charged once per purchase – which may limit regulators’ concerns that buy now, pay later services are a costly debt trap.
However, providers of buy now, pay later services make most of their money by charging a fee per sale to the respective business.
PayPal will not charge an additional fee for businesses to use its new service. Its standard fee for businesses making a sale is 2.6 per cent and a 30 cents transaction fee.
Afterpay’s fee, according to analysts, is about 3.8 per cent but can range between three and seven per cent depending on the size of the business.
PayPal last year revealed it intended to provide buy now, pay later services and while it is taking time to become available for Australians, the company’s general manager of payments in Australia, Andrew Toon, said the effort was part of a global rollout.
He acknowledged shoppers already had plenty of services to choose from.
“It’s a busy space but competition is great for consumers,” he said.
RBC Capital Markets analyst Daniel Perlin said buy now, pay later services made up 2.1 per cent of e-commerce spending in 2020.
He expected this percentage to double by 2024.