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View Full Version : What's with the PayPal pay later thing?


ThelmaLou
08-12-2014, 08:31 PM
I don't use PayPal all that often, but today I ordered something from someplace where I didn't want to open an account. With the checking account withdrawal option (as opposed to the credit card option) the only choice was this "pay after you get your merchandise" thing. All I ordered was a piece of sheet music for about $8.00 and I was perfectly willing to have it debited immediately. Why should the merchant have to wait to be paid?

Why does PayPal offer (or insist on) this option? What's in it for them? Do they debit my account immediately and then sit on the money (i.e., invest it) until I get my stuff?



There's probably an explanation elsewhere on the web, but I like it when people here explain stuff to me. <Thelma settles down with Teddy Bear and a cup of cocoa.>

beowulff
08-12-2014, 08:36 PM
I think it's basically a PayPal credit card.
They want you to run up interest charges.

chiroptera
08-12-2014, 08:41 PM
I think it's basically a PayPal credit card.
They want you to run up interest charges.

Exactly.
PayPal Bill Me Later (https://www.securecheckout.billmelater.com/paycapture-content/fetch?hash=AU826TU8&content=/bmlweb/ppwpsiw.html).

Mr. Nylock
08-12-2014, 08:52 PM
I think it's basically a PayPal credit card.
They want you to run up interest charges.

Correct me if I am wrong, but I believe it is 6 months of no interest. I specifically updated my paypal account so I could try it, but I have not used it yet.

GrandWino
08-12-2014, 08:58 PM
Correct me if I am wrong, but I believe it is 6 months of no interest. I specifically updated my paypal account so I could try it, but I have not used it yet.

Could be, but they're banking on making money from you after those six months. Or from the large percentage of users that are late on a payment during the no-interest window which disqualifies them from the offer, causing them to have to pay all of the interest for that time.

Mr. Nylock
08-12-2014, 09:02 PM
Could be, but they're banking on making money from you after those six months. Or from the large percentage of users that are late on a payment during the no-interest window which disqualifies them from the offer, causing them to have to pay all of the interest for that time.

6 months no interest seems like a good deal to me. I think they make money from the fees the merchants pay on a transaction; so even without interest, they still make money that way as long as you pay. I am not really sure about this; it is just speculation on my part.

Exapno Mapcase
08-12-2014, 09:46 PM
6 months no interest seems like a good deal to me. I think they make money from the fees the merchants pay on a transaction; so even without interest, they still make money that way as long as you pay. I am not really sure about this; it is just speculation on my part.

Of course they make money: they want to make MORE money. And finding suckers who think it's a good idea now and forget to pay attention in six months is a sure way of making that extra money.

Mdcastle
08-12-2014, 10:45 PM
You mean "Pay after Delivery?"
https://www.paypal.com/us/cgi-bin/webscr?cmd=xpt/Marketing/general/PADLaunch-outside
There's no catch and no interest charges. PayPal likes to make this a default option but you can change it by changing the payment type with the drop down box. Paypal pays the seller immediately and then charges you two weeks later. I'd speculate the reason they offer this is some people are still uncomfortable shopping online, this way they be sure to get the item before they pay, rather than have to pay for it immediately and then get the charge reversed if there's a problem.

usedtobe
08-12-2014, 10:59 PM
Read the fine print!

That "6 months free interest" is free - until you are a day late on a payment - then that 6 months interest (compounded) becomes due - at 23% APR.

It's a sucker trap - the scary thing is - it is a real credit card - PayPal (owned by ebay) bought a bank which had come up with this sucker trap.

Ebay now owns a real bank. Be scared. Think "Wal-Mart of the retail banking business".

ThelmaLou
08-12-2014, 11:43 PM
You mean "Pay after Delivery?"
https://www.paypal.com/us/cgi-bin/webscr?cmd=xpt/Marketing/general/PADLaunch-outside
There's no catch and no interest charges. PayPal likes to make this a default option but you can change it by changing the payment type with the drop down box. Paypal pays the seller immediately and then charges you two weeks later. I'd speculate the reason they offer this is some people are still uncomfortable shopping online, this way they be sure to get the item before they pay, rather than have to pay for it immediately and then get the charge reversed if there's a problem.
THIS is what I'm talking about, NOT "six months free interest."

Okay, this makes sense. I couldn't find the option to reject this choice, but I was in kind of a hurry and didn't search the page thoroughly.

Thanks.

<Finished my cocoa. Me and Teddy off to beddy.>

bob++
08-13-2014, 06:07 AM
Interest free (but don't dare be a day late), or buy now pay later schemes have been around a long time. I bet some trader in a Medieval market came up with it first, or maybe a Mesopotamian trader.

Remember Shylock? He wanted more than just a bit of interest:)

kayaker
08-13-2014, 06:57 AM
“The large print giveth and the small print taketh away.”...

Omar Little
08-13-2014, 12:55 PM
You are also opening a credit account which will put a ding on your credit report, when you exercise that option.

Chefguy
08-13-2014, 01:23 PM
Of course they make money: they want to make MORE money. And finding suckers who think it's a good idea now and forget to pay attention in six months is a sure way of making that extra money.

I have no sympathies for people who can't set up alerts on their computers. I've used this option before with Paypal, when I didn't feel like paying for an expensive item just before Christmas. I'm pretty sure I paid it off early, rather than waiting the six months. But yeah, they're betting on people being lazy and stupid and busy.

Bones Daley
08-13-2014, 04:52 PM
What's with all this "six months free interest" ? Where do Paypal offer that ?

Paypal don't issue credit cards, they do issue Mastercards to selected customers, but they are really debit cards.

Mdcastle explained the situation succinctly and accurately in his post .

You mean "Pay after Delivery?"
https://www.paypal.com/us/cgi-bin/webscr?cmd=xpt/Marketing/general/PADLaunch-outside
There's no catch and no interest charges. PayPal likes to make this a default option but you can change it by changing the payment type with the drop down box. Paypal pays the seller immediately and then charges you two weeks later. I'd speculate the reason they offer this is some people are still uncomfortable shopping online, this way they be sure to get the item before they pay, rather than have to pay for it immediately and then get the charge reversed if there's a problem.

Omar Little
08-13-2014, 04:59 PM
They do have a credit line account, which is what the "Bill Me Later" program has become:

https://www.paypal.com/webapps/mpp/billmelater-productoverview

The Annual Percentage Rate for standard purchases and cash advances on a PayPal Credit line is 19.99%, although some special offers have a lower, promotional APR. The Minimum Interest Charge is $2.00. Of course, you can choose to pay your entire balance by the payment due date to avoid interest charges.

usedtobe
08-14-2014, 02:11 AM
Wow! Only 20% now? How generous of them...

ThelmaLou
05-24-2015, 03:09 PM
An article on this turned up today in the Atlantic (http://www.theatlantic.com/business/archive/2015/05/why-is-paypal-in-the-credit-game/394010/)online.

usedtobe
05-24-2015, 08:06 PM
LOOK OUT FOR "NO INTEREST FOR 6 MOS"

Read the fine print.
Typically, the interest accrues during that 6 months (and, at 20%*, it accrues and componds breathtakingly fast). You are not billed for that fee, but it is still on the books.
If you are EVER a day late in making a payment (and, people who think 20% is a good deal are likely to be a bit careless), that accrued interest becomes payable.

* - IIRC, it was originally 21.9% APR for "Bill Me Later" - how's that for an arrogant attitude? I can't be bothered to pay peons - send a bill to my people...

Exapno Mapcase
05-24-2015, 09:22 PM
LOOK OUT FOR "NO INTEREST FOR 6 MOS"

Read the fine print.
Typically, the interest accrues during that 6 months (and, at 20%*, it accrues and componds breathtakingly fast). You are not billed for that fee, but it is still on the books.
If you are EVER a day late in making a payment (and, people who think 20% is a good deal are likely to be a bit careless), that accrued interest becomes payable.

* - IIRC, it was originally 21.9% APR for "Bill Me Later" - how's that for an arrogant attitude? I can't be bothered to pay peons - send a bill to my people...

No kidding.
Read the fine print!

That "6 months free interest" is free - until you are a day late on a payment - then that 6 months interest (compounded) becomes due - at 23% APR.

It's a sucker trap - the scary thing is - it is a real credit card - PayPal (owned by ebay) bought a bank which had come up with this sucker trap.

Ebay now owns a real bank. Be scared. Think "Wal-Mart of the retail banking business".

usedtobe
05-25-2015, 02:43 AM
Yeah, I have a thing about Paypal...

As should all right-thinking persons everywhere.

LSLGuy
05-25-2015, 06:54 AM
There's nothing wrong with free money. Lots of people successfully take advantage of these financial loss leaders. Just like lots of people go into grocery store, buy only what's on sale, and don't fall for the extra-marked-up stuff mixed in with the deals.

Yes, some folks fall prey to the gimmick. Don't be that person. It's 100% under your control.

NineToTheSky
05-25-2015, 11:27 AM
I think, and the OP's second post seems to confirm this, that Pay After Delivery is nothing to do with extended credit or anything like that.

From PayPal's help page:
Pay After Delivery is a payment method that we’re offering to selected customers, where you don’t pay for your item until after you’ve received it.

We pay the seller immediately, so they can send you the item straight away, but we wait for 14 days before we debit the money from your bank account. This gives you time to receive and view your item before you pay. If the item doesn't arrive or isn't what you expected, you’ve 180 days from the transaction date to report a problem as usual. Our Buyer Protection covers you for eligible items.

We only offer Pay After Delivery to selected customers with a confirmed bank account. If you’ve signed up for it, you’ll have the option to select it during checkout, but you may not be able to use it for all your purchases, including intangible goods and cross-border purchases.