PayPal to launch buy now, pay later in Australia

After a successful launch in its home market, PayPal will take on its global buy now, pay later rivals in Australia in time for the June sales.

PayPal is bringing its new buy now, pay later service to Australia after a successful US launch. Picture: AFP

PayPal is relishing the prospect of competing against global buy now, pay later rivals Afterpay, Klarna and Zip in the Australian market, after its BNPL solution ranked as the company’s most successful product launch in the US.

The product, called PayPal Pay in 4, is set to launch here in readiness for the June end-of-financial-year sales, providing an interest-free BNPL solution at no additional cost to merchants beyond their existing account arrangements.

Customers will be able to split eligible purchases from $50 to $1500 over four equal, interest-free instalments, with automatic repayments drawn every two weeks.

No fees will be charged when payments are made on time.

Andrew Toon, general manager for payments, said only PayPal’s digital wallet could provide multiple payment options: in real time with a debit or credit card; 21 days later with Pay After Delivery, or in four instalments using PayPal Pay in 4.

“Australia is our fourth-largest market by transaction volume, and we’ve been inundated with requests from our business customers to launch here,” Mr Toon said.

“Competition delivers better customer outcomes because of the focus on innovation.”

PayPal’s, general manager of payments for Australia, Andrew Toon. Picture: Supplied.

On the subject of regulation and the push by consumer groups for compulsory credit checks, Mr Toon said PayPal wanted to be a “responsible payments platform” with robust suitability checks.

The company’s own data, he said, would be the primary source for its credit checks, with Equifax used for an external check when the company-generated data was insufficient.

PayPal has been operating in Australia since 2005, and has 9.1 million active customer accounts ranging from sole proprietors and developers to established large merchants.

Globally, the platform has more than 377 million customers and merchants in more than 200 markets.

While PayPal has already launched in the US, Britain and France, the company precipitated a market rout among locally listed players last September when it announced its intention to seed its BNPL product in ­Australia.

Afterpay slumped 8 per cent, Zip sagged 12.8 per cent and US-focused Sezzle shed 14.7 per cent in a BNPL bloodbath.

Part of the attraction of the Australian market is that two million people transacted online for the first time during the pandemic.

A similar trend occurred in the US, with a boom in pandemic-induced online shopping causing a surge in PayPal’s revenue and share price.

An independent report by US market research firm Forrester found that PayPal is currently offered by 83 per cent of the top 100 retailers in the US as the digital payment platform of choice at point of sale.

PayPal chief executive Daniel Schulman told analysts last November he was “extraordinarily pleased” with the com­pany’s BNPL success, saying demand in the US was tremendous.

“For merchants, unlike any of the competitors that are offering BNPL functionality, we’re offering this as part of our service,” Mr Schulman said.

“There are no incremental fees except for the basic transaction fees that we charge merchants today.

“I think it’s going to be one of our big growth drivers as we go into next year and into 2022, and by the way, there’s a tonne more we can do on that too. We’ve got a large road map around that.”

PayPal Pay in 4 will be accessible to consumers in two ways.

When a consumer pays using the standard PayPal button, it will appear at checkout in the PayPal wallet as a payment option. Businesses can also present the product as a payment option on their website.

As an option in the PayPal wallet, the BNPL product can be used at any business around the world where PayPal is accepted.