PayPal introduced a new option for shoppers that allows them to defer payment for their purchases and pay in monthly installments, although buyers will want to pay attention to the cost of using the service.
PayPal described the new offering as follows:
“Pay Monthly is a new way for customers to make large purchases between $199-$10,000 and lets them break the total cost into monthly payments over a 6–24-month period, with the first payment due one month after purchase. Once a customer selects Pay Monthly, they will complete an application at checkout and, if approved, will be presented with up to three different plans of varying lengths with risk-based APR ranging from 0%-29.99%. Customers can then compare and select the option that best suits their budget.”
The APR of between 0% and 30% is a big range and something consumers should not overlook.
Shoppers can select between using their debit card or bank account for repayment and seamlessly manage and track payments through the PayPal app and online, the company explained.
What’s in it for merchants who offer PayPal? The company explained:
“Pay Monthly will be automatically available for merchants at no additional cost or risk and requires no complex back-office integration to add as a payment option. Similar to Pay in 4, merchants can also add dynamic messaging to deliver relevant Pay Later options that are presented early in the customer’s shopping journey to let them know they will have the option to spread out payments at checkout.”
A PayPal spokesperson explained the other “buy now, pay later” (BNPL) options the company offers:
“In the US, PayPal Pay in 4 allows consumers to split their purchases into 4 equal payments across 6 weeks (starting with the day of purchase). This is for purchases between $30 and $1500.
“We also offer PayPal Credit which is not a BNPL option but a revolving credit line that includes a 6 month no interest promotional rate for purchases over $99. (Minimum payments must be made to remain eligible.)”
You can find the full announcement on the PayPal corporate website.