FinTech: PayPal Challenges Klarna In U.K. BNPL Tussle

October 15, 2020 | FinTech, News

PayPal throws down the gauntlet with its ‘Pay in 3’ BNPL offer.

Fresh from its “Pay in 4” launch in the U.S. last month, payments behemoth PayPal (NASDAQ: PYPL) ratcheted up the ante in the BNPL wars with its launch Wednesday of a “Pay in 3” offer in the Buy-Now-Pay-Later (BNPL) category in the U.K. (Finextra)

Pay in 3 in the U.K.

Entrenched BNPL players such as European fintech giant Klarna and Australia-listed Afterpay (ASX: APT) now have to face-off with the credit might of PayPal. The latter is offering shoppers the option of making purchases and paying for them over three, interest-free monthly installments. The scheme covers purchases in the range of £ 45 and £ 2000 and repayments are automatic each month.

The credit facility comes at no additional cost to the merchant business or the customer. PayPal pays for the purchases upfront to the businesses and realizes payments from the customers later. So the merchant business is not exposed to any extra risk.

PayPal has signed up several British retailers to offer the service, including Crew Clothing, French Connection, Robert Dyas, and Ryman.


According to PayPal, 56% of customers prefer to pay for the purchase on an installment offer rather than through their credit card.

BNPL offers have been a huge hit due to the uncertain economic conditions following Covid-19. Shoppers have welcomed the free-free, zero interest facilities offered by fintechs such as Klarna, PayPal, and Afterpay.

Afterpay rolls out its in-store BNPL service in the U.S.

Meanwhile, across the pond, Afterpay announced Tuesday its rollout of a BNPL offer to all US customers at major retail stores nationwide.

The company was already offering a 4-installment BNPL scheme to online customers in the US. Now, customers can pay for in-store purchases in four installment payments without any fee or interest.

“Afterpay customers can now choose either physical or online shopping to buy holiday gifts – which brings new customers and drives more sales conversion to retailers without any additional set-up or integration costs,” said Nick Molnar, Afterpay’s Co-founder and CEO of North America.

Related Story:    PayPal Introduces “Pay in 4”, An Interest-Free BNPL Offering

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