PayPal introduces interest-free buy-now-pay-later product

Anyone knows if this is a rebranding / revival of Bill Me Later? I used this #BNPL product when it was launched in circa 2008. BML was acquired by PayPal the following year. I don't recall hearing about it for the next 10 years.

I don't know about Bill Me Later, I have a question myself; is "Pay in 4" the same thing as "Pay in 4X" ?

The PayPal terms & conditions for "Pay in 4X" say customers pay a Consumer Fee of 2.1% of the loan amount, plus a currency conversion fee and currency conversion rate variation if applicable, and there's a late fee of 8% of the value of a missed repayment.

If "Pay in 4" and "Pay in 4X" are the same thing, it's misleading to say the product has "no fees or interest."

The 2.1% Consumer Fee is capped but still represents pretty decent revenue for PayPal especially with interest rates as low as they are now.  Someone who knows consumer default rates could comment on whether the 8% late fee is less than or more than adequate to cover their credit risk.

Is Paypal meeting up the US expansion of the European "pay later" company Klarna? Typically customers in Europe can pay "interest free" but with a "fee" instead on the instalments. A heavy late payment fee is part of the business case. Customers can also postpone the payment and start paying interest - i.e. buy on a consumer credit line. And the credit line is available for repetitive purchases in multiple stores using the same check-out service. The credit card business is challenged by biller credit.  In Sweden the legislators from July 1 require any on-line merchant to offer as default payment a debit card payment or on-line bank account transfer and then consumers would pay with existing own funds unless they choose to change the default option into a "pay later" option. The measure is to protect consumers from the excessive push for consumer lending, high fees and the risk of ending up as a default case. Merchants require that their billing partner accepts almost all consumers and this will drive credit losses and a "late payer fee" likely does not cover such "pay never" customer losses. One will likely need interest from all who postpone the payment beyond the instalments. 

According to The Intercept article, new fed rules (in USA) are making it easier for Fintech industry to sidestep state regulations re. max interest rate, fees, tenure. Maybe Pay in 4 is the result of leveraging the resultant Regulatory Gap opportunities on Pay in 4X?

Will that Swedish legislation prevent on-line merchants from offering credit-card as the default payment method ?  If so, will it also apply to foreign companies that sell to Swedish consumers ?  A great many websites offer credit-card as the default (or only) payment method.  Debit-card and bank-transfer payment methods tend to be country-specific, more difficult for a foreign company.

If the legislation does apply to credit-cards (and is enforced for foreign companies) many companies will decide the Swedish market is too small for the trouble and will geo-block, Swedish consumers end up with less choice.

If the legislation doesn't apply to credit cards (only to biller-credit) the effect will be to protect the credit card companies from competition and to reduce consumer choice of credit products.

The Swedish legislation applies to all e comm companies operating in Sweden with a domicile in the country. A foreign x-border sale is not under Swedish jurisdiction. Almost all Swedes with bank accounts have a Visa or MC connected debit card and also have SCA capability for e comm payments through the wide spread bank ID application. Furthermore 90% of the adult polulation also have the real time A2A payment application Swish loaded into their phones and it can also be used for e comm payments. On top of that many e comm merchants also offer a bank-link option whereby payer can initiate a crefit transfer from the internet bank application in the shopping payment session. If one wants to pay with a credit card, that option is now subject to  choiche - and you do that by selecting to pay via your credit card instead of the debit card. Should not be a problem for international merchants unless they use the V and MC option in only accepting credit cards. 

"If one wants to pay with a credit card, that option is now subject to  choiche".

TBH, I don't see what has changed. Virtually every online checkout page I've seen in the last 25 years in several countries offers a choice of payment methods and it was *always* down to me to choose which payment method I wanted to use. What's the difference?

Many check out pages sponsored by these biller companies have a default option to give the customer a new credit and set up an on-line credit line. To the customer it looks like an invoice - if paid within a few days only a 2 - 3 USD consumer fee is applicable, if paid after the short due date, a 9 USD consumer fee is applied, and if not paid in full the apr of some 10 - 20% starts running.  If the consumer wants to apy in another way one needs to change the "bill" option into e.g. credit card. Now the regulation demands the pre-filled default (is that is implemented)  to be a "no credit" payment (debit card, on-line credit transfer, real time credit transfer...) and then the customer can change it to an invoice, credit card or other credit payment. Invoice is considered to be a credit payment option. 

I'm reminded of this Finextra post Payment industry is heating up but is it helping merchants? and my comments below it. It's from 2012.

Eight years ago, we were saying that there was a plethora of payment methods available to Merchants! 

Can you cite a couple of examples of such Merchants / Billers who have "a default option to give the customer a new credit and set up an on-line credit line"? 

Klarna, and the new Swedish legislation is thereby nick-named Lex Klarna. Other smaller merchant billing services have used similar set-ups. The main advantages for the consumer are: get your merchandise before you pay + extremely easy check-out compared to card pan key entry 16 digits + passwords... Merchant is paid on day 1 - a fee by biller and the consumer may use the credit facility and anyway pay consumer fees. When shopping again in same store or another store with same check-out, the account is reusable. Resolved consumer user interface issues that card schemes had been struggling to resolve in e comm shopping for the last 25 years.  

Sorry but this doesn't answer my question. You're talking about Klarna's aspiration. Frankly, every PSP in the world will aspire for all merchants in the world to use only their payment method. But that's not the same as reality.

My question was / is, how many Merchants have BNPL / credit line options from these PSPs as the default or only option on their checkout page? TBH, I haven't seen a single one.

Most domestic e comm merchants in Scandinavia and a good deal in Germany 

"Invoice is considered to be a credit payment option" i.e. trade credit.  Does this legislation apply to business-to-business websites ?

Many companies in the distribution sector offer on-line purchases for on-account customers only.  They view their website as another channel for the use of their trade customers, an alternative or supplement to phone & email.  Many don't offer direct retail sales at all, for a variety of reasons.  Typically they want long-standing relationships with trusted business customers; margins may be low, but the value of each sale is high, and risk of non-payment is low.  They don't want the hassle of retail.  How will this legislation affect such companies ?

I tried my old saturn.de account. It worked!

At the start of checkout, it displayed logos of Visa, MC, Klarna and many other PSPs. But, at the penultimate stage of checkout, it asked me to enter my address for "invoice" without displaying any other payment methods. That was dodgy!

I guess Saturn is one of the ecommerce merchants in Germany that offers BNPL / Credit as default payment method.

I'm reminded of my many trips to SATURN in Germany in the early 2000s. I was always perplexed by this electronic retailer's policy of refusing credit cards. Then one day, while standing in the long checkout queue made longer by people patiently forking out cash to hand over to the cashier, I noticed a sign for a SATURN-Visa co-branded credit card. I thought things had changed until I reached the checkout counter, only to be told by the attendant that the co-branded card was only a marketing tool for branding purpose, and that SATURN still did not accept credit card!

From refusing its own credit card to offering credit as default payment method - SATURN has come a long way!