Competition in the Australian buy now pay later (BNPL) market is about to increase for leaders Afterpay Ltd (ASX: APT) and Zip Co Ltd (ASX: Z1P).
Following a successful launch late last year in the United States, payments giant PayPal (NASDAQ: PYPL) has just announced plans to bring its service to the Australian market.
What did PayPal announce?
On Tuesday PayPal announced that it will be launching its Pay in 4 BNPL product in Australia in the coming months.
According to the release, PayPal, which has over 9 million active accounts in Australia, intends to roll out the BNPL solution to its Australian customers in early June 2021. This will mean it is ready for use by the end of financial year sales period.
The release explains that the Pay in 4 service will be accessible to consumers in two ways. One is when a consumer pays using the standard PayPal button. After clicking, it will appear at checkout in the PayPal wallet as a payment option.
In addition, businesses can present PayPal Pay in 4 as a distinct payment option on their website.
The company notes that as PayPal Pay in 4 is a payment option in the PayPal wallet, it will be available for consumers wherever PayPal is accepted. This means consumers can use it at hundreds of thousands of Australian businesses and millions of global businesses.
PayPal also notes that its regular security and protections offered by its platform will apply for transactions made using PayPal Pay in 4.
As a result, eligible purchases will be covered by PayPal's Buyer Protection. This means that if a product does not arrive, PayPal can refund the full purchase price, including delivery. Businesses will also benefit from PayPal's advanced decisioning process to prevent fraud while underwriting shoppers. They will also be covered by PayPal's Seller Protection for eligible transactions.
Importantly, unlike Afterpay and Zip, PayPal Pay in 4 provides an interest-free buy now, pay later solution to consumers at no additional cost to PayPal business customers. Though, PayPal's existing account arrangements remain applicable. It currently charges 2.6% + 30 cents for commercial transactions.
More choice
PayPal Australia's General Manager of Payments, Andrew Toon, commented: "Australian consumers are looking for more choice and flexibility and PayPal Pay in 4 gives them yet another way to purchase securely using PayPal. PayPal's digital wallet is the only solution that provides multiple ways to pay all in the one place – instantly with debit or credit card; 21 days later with our Pay After Delivery option; and now in four interest-free instalments using PayPal Pay in 4."
"Our Australian business customers have been requesting buy now pay later functionality from us, and we're excited that we can offer PayPal Pay in 4 to them at no additional cost. Shopping habits are changing at an unprecedented rate and during the pandemic we saw more than two million Australians start shopping online for the first time. We will continue to support Australian businesses of all sizes to adapt to rapidly changing consumer behaviours by evolving our service to meet their needs."
