PayPal will no longer charge late fees for buy now, pay later purchases

It will scrap late fees for users in the US, UK and France.

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Soon, you'll no longer get hit with additional charges if you miss a PayPal installment for a previous purchase. The online payment giant has announced that it will stop charging late fees for global purchases made using Pay in 4 in the US, Pay in 3 in the UK and Pay in 4X in France starting on October 1st.

Those buy now, pay later products launched in October 2020 give you the option to buy goods from participating online stores without having to pay upfront or all at once and without incurring interest. When you choose the option at checkout in the US, PayPal will split your payments into three or four and will charge you every two weeks. Before the company scrapped late fees, it charged a minimum amount of $8 for missed payments for those three locations.

In its announcement, the company said this step builds "on the success of [its] Pay in 4 launch in Australia without late fees." Aside from Australia, PayPal also doesn't penalize users in Germany who fail to pay on time. Greg Lisiewski, Vice President of Global Pay Later Products at PayPal, added: "[W]e know that eliminating late fees delivers an even better buy now, pay later experience that provides incredible value to our consumers and merchant partners."

This move could also help PayPal retain customers in the face of competition. Square recently announced its plans to acquire the buy now, pay later platform Afterpay for $29 billion. Apple is also reportedly working on a pay later feature for Apple Pay.