PayPal Takes On Buy Now Pay Later Space In Australia

PayPal Australia is moving into the buy now pay, later (BNPL) space, offering no late charge fees and lower minimum purchase thresholds, Reuters reported on Tuesday (July 13). PayPal is looking to unseat competitor Afterpay and others in the country.

PayPal Pay in 4 was introduced to Australia last month and has since dropped its required minimum purchase A$30 (approximately $22.44) from A$50 (approximately $37.40).

Afterpay charges customers a A$10 (approximately $7.45) fee if they do not make a payment by the due date, with a provision for additional penalties, not to exceed the original debt value. The Netherlands BNPL firm gives merchants the option to set minimum pricing.

PayPal has over 9 million customers using its services in Australia. Afterpay is not the only service concerned by PayPal’s entry into the quickly growing BNPL space. Other local firms competing in the sector, like Zip, Splitit and Sezzle, are also impacted, according to Reuters.

A survey conducted by PayPal indicated that some 50 percent of respondents would drop a BNPL company if high late fees were part of the service.

“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, per Reuters.

The Silicon Valley-headquartered firm said that, rather than institute late fees, it would turn to its own data and analytics — and even credit bureaus — to extend Pay in 4 to a new customer requesting it.

The BNPL space continues to expand, with new players and options added to attract both consumers and merchant partners. PYMNTS BNPL data from earlier this year show that 37 percent of U.S. shoppers have tried BNPL, and its use has grown over 200 percent year over year just in the U.S.