PayPal stop charging late fees on BNPL purchases

The change will take effect from October 1 and see the three countries join Germany and Australia, where the fintech company also does not charge late fees for missed payments.

Consumers are increasingly using BNPL products, with merchants also seeing the benefit of this. Merchants that offer PayPal’s BNPL system - which lets consumers split their purchase into four payments - found that 50% of consumers make additional purchases within three months of their first purchase, with 70% doing this within six months.

Commenting on the news, PayPal’s vice president of global pay later products Greg Lisiewski said: “Building on the success of our Pay in 4 launch in Australia, we know that eliminating late fees delivers an even better buy now, pay later experience that provides value to our consumers and merchant partners. We’re able to help provide consumers peace of mind as they manage their plans on their terms while also helping merchants increase sales conversions.”

David Oksman, vice president of marketing and ecommerce at Samsonite - a company that uses PayPal’s BNPL services - added: "Our customers have had the option to use PayPal Pay in 4 since October 2020, and we’ve seen an incredible response and adoption as our customers experienced different economic situations and wanted flexible payment options.

"We’re very excited about PayPal’s decision to no longer charge late fees, as it provides value for our consumers while also giving them the reassurance that a missed payment will not incur additional financial penalties."