Beginning Oct. 1, PayPal will no longer charge a late fee when customers miss a payment using the PayPal Pay in 4 service. It's the latest move in the increasingly competitive world of buy now, pay later (BNPL) services.
Key Takeaways
- Buy now, pay later (BNPL) services make it easier for consumers to shop online and pay off their purchases over time and interest-free.
- PayPal's decision to drop late fees may give it an advantage over some competitors.
- The move comes as competition in the BNPL world heats up with big investments and acquisitions.
How PayPal Is Changing 'Pay in 4'
PayPal's Pay in 4 service allows users to shop at millions of online stores and pay off their purchases over time instead of immediately.
PayPal launched the BNPL service last year. Pay in 4 splits the cost of a purchase into four equal installments. Users pay the first installment at checkout, then the remaining three at two-week intervals over the following six weeks.
Like other BNPL services, Pay in 4 doesn't charge interest, but it does charge late fees if users miss a payment.
But that will no longer be the case with new purchases on or after Oct. 1, 2021. The move matches Affirm, which doesn't charge late fees on its BNPL service.
Users should keep in mind, though, that missing a payment could negatively affect your credit score if you leave it unpaid for 30 days or longer. It could also cause you to get blacklisted by the BNPL service on future online purchases.
Big Investments in Buy Now, Pay Later Services
The online BNPL movement is relatively new, but it's growing quickly. The coronavirus pandemic likely helped, as consumers shifted their spending more toward online purchases, and economic difficulties made it more necessary for some to pay over time.
Earlier this month, Square announced that it would acquire Afterpay, another leading BNPL service, for $29 billion. Another competitor, Klarna, received a $46 billion valuation in a funding round in June.
Is there something pricey on your wishlist that you want to buy now, but would rather pay off over time instead of upfront? PayPal recently introduced a new service called Pay In 4, which lets you make an online purchase between $30 and $600 and pay it off in four bi-weekly installments. According to PayPal, Pay in 4 doesn't affect your credit score, and there is 0% interest on the bi-weekly payments. Basically, it's like a low-risk microloan backed by PayPal to make purchasing larger items like a TV or laptop more manageable.
To use Pay in 4, you must have a valid PayPal account connected to a debit or credit card. When checking out online during a purchase, look for the Pay Later button under the usual PayPal Checkout button. You will then be prompted to login to PayPal and select your shipping and payment info. PayPal will then either approve or deny your use of Pay in 4.
To determine if you're eligible, PayPal says it runs a soft credit check that won't hurt your credit score. Your payment dates and the amounts owed on each date will be displayed before you make the purchase, so you know exactly when and how much your credit or debit card will be charged for each payment.
Your first payment is due at the time of purchase, followed by three installments every 15 days until the balance is automatically paid off. All you need to worry about is keeping your debit or credit card in good standing during the payoff period and managing your credit card payments as usual (unless you used a debit card, which would automatically withdraw funds from your bank account).
CNET's Stephen Beacham demonstrates how PayPal's Pay in 4 service works in the How To video embedded above on the How To Do It All YouTube Channel. Watch the video and make sure to like and subscribe for more How To videos from CNET. Also check out how to use PayPal's QR Codes to make purchases and get paid below.
In the last few years, buy-now-pay-later platforms and functions have become extremely popular. PayPal Credit and PayPal Pay in 4 are two of the company’s buy-now-pay-later options.
As a result, you may be perplexed as to why PayPal Pay in 4 is not available on your account. Here’s what I found out about PayPal Pay at 4 p.m.!
In 2022, why won’t “Pay in 4” appear on PayPal?
PayPal Pay in 4 may not appear on your PayPal account for one of two reasons. Because PayPal may have already done a “internal check” on your account, and decided not to offer it to you yet, this is the first reason why. Second, Pay in 4 isn’t yet available in every state. In spite of this, PayPal is currently working to expand this option.
For more information on how PayPal Pay in 4 works, which states it is not available in, and more, please continue reading!
What’s Wrong With PayPal Pay in 4?
Pay in 4 is currently only available to a select group of PayPal customers in the United States. The good news is that this number is steadily rising! The state in which you reside has an impact on the pay in 4 availability.
Missouri, New Mexico, Nevada, North Dakota and Wisconsin are currently the only states where Pay in 4 is not currently available.
PayPal’s Pay in 4 services will not be available to residents of these states or territories for the time being.
PayPal may have already performed a “internal check” on your account if you live in a state where Pay in 4 is available, but you don’t see the feature.
As a result of this investigation, PayPal may have concluded that you are not a good candidate for their service.
Do You Know How to Use Pay in 4?
You can divide your purchase into four installments with PayPal Pay in 4, a buy-now-pay-later option.
The first payment is due at the time of purchase, and the next three payments are due every two weeks after that.
There is also a 30-$1500 Pay in 4 option available. You can only use Pay in 4 online, so you can’t use it in a store at this time.
In order to take advantage of Pay in 4, follow these instructions:
- Then go to the checkout and finish your purchases.
- Pay with PayPal instead of a credit or debit card.
- In that case, you will not be able to make use of the Pay in 4 option on your purchase and will not see it.
- To pay in four equal installments, select “Pay in 4.”
- Continue with the checkout process by making your first purchase and completing your order.
- After that, all that’s left are the final three payments, which must be made every two weeks.
Thankfully, submitting an application for Pay in 4 will have no impact on your credit score.
How Do I Get PayPal Pay Approved in 4?
You must first apply for PayPal Pay in 4 before you can use it.
To be eligible for Pay in 4, you must have a PayPal account that is “in good standing” and have the feature available in your state.
To apply in your state, you can do so either through the app or PayPalor at checkout, if you are eligible.
PayPal or the PayPal app can be used to apply for Pay in 4 here.
To make use of PayPal Pay in 4, follow these steps:
- Selecting PayPal as your payment method at checkout is the first step
- At the time of purchase, you will be informed if your purchase qualifies for Pay in 4
- Secondly, select “Pay Later.”
- Choose the Pay in Four option and fill in the required information.
- After that, you’ll get an answer in a matter of seconds.
To complete your purchase, you’ll need to make your first payment, if you’ve been approved.
Finally, every two weeks, you’ll make the final three payments in the app or via PayPal.
If you aren’t approved, you’ll have to proceed to the checkout without Pay in 4 in order to avoid disappointment.
Additionally, if your application is rejected, you will receive an email from PayPal explaining why you were rejected, regardless of whether you applied through checkout or PayPal.
PayPal also takes your financial situation, the information you provided on your application, and data from your PayPal usage and history into account when processing your application..
Your application may even be processed by PayPal using “external bureau data.”
The “loan agreement” must also be read and accepted in order to complete the Pay in 4 application process.
When you apply for a loan, you will be given the option to download a copy of the agreement.
To learn more about why PayPal is so slow, is PayPal a bank, and how long do PayPal refunds take, check out our other posts.
Bottom Line
PayPal Purchasing now and paying for it later is possible with PayPal’s Pay in 4. It is possible to buy items and pay for them in four installments, allowing you to spread out the cost over time.
Unfortunately, Pay in 4 is not yet available to everyone. Pay in 4 may not be available to you because PayPal has already viewed your account and deemed it ineligible. Additionally, PayPal Pay in 4 is currently only available in the United States; it’s not yet available to all residents.