PayPal cancels late fees for “buy first, pay later” customers.
Many people in the United States & around the world have lost their jobs due to the coronavirus pandemic. Although many companies allow people to work from home, some jobs that cannot be done remotely are forced to terminate or fire workers. As people lose their jobs, some banks and credit card companies have canceled late fees.
PayPal has now announced that it will eliminate late fees for “buy before pay” products worldwide. Starting October 1, new purchases made with Pay in 4 in the US, Pay in 3 in the UK, & Pay in 4X in France will not charge any late fees to consumers who missed the payment. PayPal has eliminated late fees in its German and Australian markets, a change that matches its products in other major markets.
PayPal stated that consumers are working hard to manage their budgets and are looking for cheaper payment methods. It pointed out that a recent study found that 33% of consumers said that when choosing a payment method, no late fees are the main consideration. PayPal also claims that there are no late fees to benefit merchants.
The company cited indicators that 50% of consumers who provide Pay in 4 merchants use the Pay later plan to make additional PayPal purchases within three months after the first purchase, and 70% of consumers make additional purchases within six months Purchase. The cancellation of late fees will not increase the cost of the merchant.
PayPal claims that offering a “pay later” option can increase shopping cart size and conversion rates by as much as 39%. PayPal launched the Pay in 4 product in October 2020. It points to the luggage company Samsonite, which adopted a payment product shortly after its launch. PayPal reports that when customers choose PayPal Pay in 4, Samsonite’s average order value increased by 25%.
