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.>
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.
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.
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.
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:)
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.
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…