PayPal Eliminates Late Fees For Buy Now, Pay Later Customers

Many people in the United States and around the world have been put out of work by the coronavirus pandemic. While many companies have allowed people to work from home, some jobs that can't be done remotely have been forced to terminate or lay off workers. With people out of work, some banks and credit card companies have eliminated late fees.

PayPal has now announced that it is eliminating late fees globally for Buy Now, Pay Later products. Beginning October 1, new purchases using Pay in 4 in the US, Pay in 3 in the UK, and Pay in 4X in France won't apply any late fees for consumers who miss a payment. PayPal has already eliminated late fees in its German and Australian markets, and the change matches those offerings in its other major markets.

PayPal says consumers are trying to manage their budgets and are looking for payment options with fewer fees. It points to a recent study that found 33 percent of consumers say no late fees are a major consideration when choosing payment options. PayPal also claims no late fees benefit merchants.

The company cites metrics showing merchants who offer Pay in 4 see 50 percent of consumers make additional PayPal purchases using pay later plans within three months of the first purchase, and 70 percent make additional purchases within six months. The elimination of late fees doesn't increase costs for merchants.

PayPal claims that offering Pay Later options increases cart sizes and conversion rates by as much as 39 percent. PayPal launched its Pay in 4 offering in October 2020. It points to luggage company Samsonite, which adopted the payment offering shortly after it launched. PayPal reports Samsonite saw a 25 percent increase in average order value when customers chose PayPal Pay in 4.