What Is Pay in 4, a New Instalment Payment Service From Paypal

When PayPal launches Pay in 4 instalment payment service this fall, it expects an increase in transaction volumes.

PayPal launches Pay in 4 instalment payment
PayPal launches Pay in 4. PHOTO via @AdobeStock

Pay in 4, the new PayPal feature enables the payment of any item that costs between $30 to $600 for a six-week instalment.

  • This is what you need to know about the next big project of PayPal.
  • Affirm, meanwhile, charges retailers a transaction fee in addition to the 10-30% interest.
  • PayPal’s new feature combines some features of both while reducing all costs.
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This year has seen the growth of point-of-sale services, a modern alternative to credit card shopping, which allows consumers to purchase goods at many smaller rates instead of the bulk. Would like that new TV, but couldn’t afford it? Well, it could be yours for 4 simple payments of $29.99.

Two financial leaders include Afterpay, a company with an $18 billion market valuation, and Affirm, a San Francisco project that flirts with the idea of an IPO in the coming year.

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But now, one of the biggest players in financial technology wants to establish a point of sale: PayPal. This is what you need to know about the next big project of PayPal. 

Pay in 4 instalment payment service

Pay in 4, a new feature in Paypal allows you to pay for every item costing $30 to $600 over six weeks in a four instalment. It is similar to its leading competitors, but with some key differences, it will be more attractive to buyers and sellers.

Retailers are charged 5% on each transaction. While it does not charge interest to consumers, it does hit them with late payment. Affirm, meanwhile, charges retailers a transaction fee in addition to the 10-30% interest it charges consumers. They do not charge late.

PayPal’s new feature combines some features of both while reducing all costs. With Pay in 4, shoppers will not be charged interest, and it will not affect sellers with extra fees. If you arrive late to pay the fee, it will charge you up to $10 late.

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What is the benefit of PayPal?

PayPal already has a dominant, profitable network that will help reduce competition. 80% of the top 100 retailers in the United States allow PayPal to be used for transactions. Meanwhile, 70% of online shoppers in the states already have a PayPal account.

The company earns its money by charging retailers a 2.9% transaction fee and 30 0.30 per purchase. But amid the COVID-19 strikes, online purchases have soared, contributing to a record-breaking year for PayPal. By 2020, it has a revenue of $5.3 billion.

But if the company is already performing well, why branch out into a growing market? Well, data from Afterpay show that when you are offered a point of sale financing option, consumers spend more money (sometimes as much as 20% more).

When PayPal launches Pay in 4 this fall, it expects an increase in transaction volumes. By earning 2.9% on each transaction, PayPal predicts that its revenue will increase at the same rate.

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