PayPal’s new Pay in 4 installment product could make it more competitive in the BNPL landscape

• PayPal unveiled its new Pay in 4 installment product.
• The new product could make it more competitive in the buy now, pay later market.

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The digital payments titan unveiled an installment payment that’ll allow approved US customers to pay for purchases from $30 to $600 in four payments made over a six-week period, with no interest or origination fees. The product will be included in existing PayPal pricing for merchants, allowing them to enable it at no additional cost, and it’ll be housed in PayPal’s wallet to make it easily accessible for consumers.

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Launching Pay in 4 could increase PayPal’s dominance in the surging buy now, pay later (BNPL) market.

• The pandemic has accelerated BNPL’s rise. Pay later programs were already growing quickly, but the pandemic accelerated adoption, likely because customers are searching for flexible payment options and avoiding credit card interest, PayPal SVP and GM of global credit Doug Bland told Insider Intelligence. And with both digital upstarts and legacy players launching new products and forging new partnerships, competition is only set to continue to intensify, especially as the holiday season approaches, when customers shop more and look more for savings.
• PayPal could leverage its existing reach to grab a bigger slice of the market. PayPal’s existing offerings, like PayPal Credit, are already widespread. Launching Pay in 4, which more directly competes with the likes of Afterpay and Klarna, could boost the business even more. With over 26 million merchant partners worldwide, PayPal has a big audience with which it can scale the product — and the firm expects to see “widespread acceptance,” per Bland. Further, it’s positioned to tap into small businesses, which may be particularly interested in BNPL solutions to boost sales but might not have had access until now. 

For PayPal, launching Pay in 4 amid a pandemic-driven digital payments boom could help it accelerate its current user and volume growth streak. The launch, which was accelerated by the pandemic, is part of a “very robust” roadmap that can further drive payment choice, per Bland. For the program to succeed, PayPal will have to work to ensure customers are aware of the new option in a crowded space.

But if it can do so, PayPal could leverage its existing wide reach, high conversion rate, and strong brand loyalty to increase already-growing engagement among existing users to entice them to use a PayPal product rather than a competitive alternative. In turn, this could bring PayPal to another corner of the payments space, tie users more tightly to the product, and accelerate overall volume growth.

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