PayPal launches Klarna rival ‘Pay in 3’ option

Article courtesy of iNews here


PayPal is wading into the Buy Now Pay Later market with a new product which allows users to pay in three instalments over a short period.


The ‘Pay in 3’ option allows online shoppers to make three interest-free payments for purchases between £45 and £2,000. The payments are monthly and automatic.


PayPal is putting a marker down in the growing Buy Now Pay Later sector, in which other providers such as Klarna and Clearpay have been making headway, especially as online shopping boomed under lockdown.


Speaking to i, Paypal’s UK director of enterprise accounts, Rob Harper, said he believed the company’s “global scale” meant it could make headway in the already busy marketplace.


“The big difference for PayPal is we are a global brand. We have millions of merchants, whether that be small businesses right up to the world’s leading brands. We’re not a small startup, VC-backed company with a brand that people don’t recognise.”


PayPal’s option offers customers three interest-free payments from £45 to £2,000 (Photo: PayPal)

The move could throw a spanner in the works for the expansion plans of rivals such as Klarna, which dominates the UK’s pay-later sector.


PayPal will not charge any additional fees to merchants who already use its payments system, making Pay in 3 a potentially attractive alternative to the likes of Klarna.



Focus on affordability

PayPal already offers similar services in other countries, including ‘Pay in 4’ in the US. It also has a PayPal credit offering in the UK. The new ‘Pay in 3’ function will differ from this by having a shorter repayment term and lower maximum spend, as well as only requiring a soft credit check.


However, Mr Harper stressed that the product would still depend on an “affordability” check, based on both a customer’s credit history and data held by PayPal. The company will also report repayment data back to credit reference agencies, a step he said PayPal believed was “important”.


In a departure from other Buy Now Pay Later providers which largely target younger shoppers, Mr Harper said PayPal was “not focused on small transactions in fast fashion” and was aimed at “considered” purchases over impulse buys. He said Pay in 3’s £45 minimum spend would help ensure this.


He said the Pay in 3 option’s £45 minimum spend would help ensure this.


The payments provider has already partnered with several retailers including Robert Dyas, Ryman, and French Connection for the launch of the new option.


However, users will be able to opt for the option anywhere that PayPal is available, not just with partner retailers.


It comes as the Buy Now Pay Later sector comes under increased scrutiny, with the Financial Conduct Authority looking into the services as part of a review of unsecured credit. Recommendations from the review are due to be presented early next year.

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