# What's with the PayPal pay later thing? **URL:** \ **Category:** Factual Questions\ **Created:** [August 13, 2014, 1:31am UTC](https://boards.straightdope.com/t/whats-with-the-paypal-pay-later-thing/695408 "2014-08-13T01:31:38Z")\ **Posts on this page:** 20\ **Page:** 1
**Author:** ![ThelmaLou](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/thelmalou/32/390_2.png) [@ThelmaLou](https://boards.straightdope.com/u/ThelmaLou)\ **Post date:** [August 13, 2014, 1:31am UTC](https://boards.straightdope.com/t/whats-with-the-paypal-pay-later-thing/695408/1 "2014-08-13T01:31:38Z")
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. _\_ ---
**Author:** ![beowulff](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/beowulff/32/542_2.png) [@beowulff](https://boards.straightdope.com/u/beowulff)\ **Post date:** [August 13, 2014, 1:36am UTC](https://boards.straightdope.com/t/whats-with-the-paypal-pay-later-thing/695408/2 "2014-08-13T01:36:25Z")
I think it’s basically a PayPal credit card. They want you to run up interest charges. ---
**Author:** ![chiroptera](https://avatars.discourse-cdn.com/v4/letter/c/df705f/32.png) [@chiroptera](https://boards.straightdope.com/u/chiroptera)\ **Post date:** [August 13, 2014, 1:41am UTC](https://boards.straightdope.com/t/whats-with-the-paypal-pay-later-thing/695408/3 "2014-08-13T01:41:17Z")
> [@beowulff](#): > > 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). ---
**Author:** ![Mr.Nylock](https://avatars.discourse-cdn.com/v4/letter/m/77aa72/32.png) [@Mr.Nylock](https://boards.straightdope.com/u/Mr.Nylock)\ **Post date:** [August 13, 2014, 1:52am UTC](https://boards.straightdope.com/t/whats-with-the-paypal-pay-later-thing/695408/4 "2014-08-13T01:52:08Z")
> [@beowulff](#): > > 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. ---
**Author:** ![GrandWino](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/grandwino/32/67_2.png) [@GrandWino](https://boards.straightdope.com/u/GrandWino)\ **Post date:** [August 13, 2014, 1:58am UTC](https://boards.straightdope.com/t/whats-with-the-paypal-pay-later-thing/695408/5 "2014-08-13T01:58:33Z")
> [@Mr.Nylock](#): > > 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. ---
**Author:** ![Mr.Nylock](https://avatars.discourse-cdn.com/v4/letter/m/77aa72/32.png) [@Mr.Nylock](https://boards.straightdope.com/u/Mr.Nylock)\ **Post date:** [August 13, 2014, 2:02am UTC](https://boards.straightdope.com/t/whats-with-the-paypal-pay-later-thing/695408/6 "2014-08-13T02:02:58Z")
> [@GrandWino](#): > > 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. ---
**Author:** ![Exapno\_Mapcase](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/exapno_mapcase/32/1051_2.png) [@Exapno\_Mapcase](https://boards.straightdope.com/u/Exapno_Mapcase)\ **Post date:** [August 13, 2014, 2:46am UTC](https://boards.straightdope.com/t/whats-with-the-paypal-pay-later-thing/695408/7 "2014-08-13T02:46:01Z")
> [@Mr.Nylock](#): > > 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. ---
**Author:** ![Mdcastle](https://avatars.discourse-cdn.com/v4/letter/m/958977/32.png) [@Mdcastle](https://boards.straightdope.com/u/Mdcastle)\ **Post date:** [August 13, 2014, 3:45am UTC](https://boards.straightdope.com/t/whats-with-the-paypal-pay-later-thing/695408/8 "2014-08-13T03:45:11Z")
You mean “Pay after Delivery?” > **[Digital Wallets, Money Management, and More](https://www.paypal.com/us/webapps/mpp/home)** > > PayPal is the faster, safer way to send and receive money or make an online payment. Get started or create a merchant account to accept payments. 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. ---
**Author:** ![usedtobe](https://avatars.discourse-cdn.com/v4/letter/u/ec9cab/32.png) [@usedtobe](https://boards.straightdope.com/u/usedtobe)\ **Post date:** [August 13, 2014, 3:59am UTC](https://boards.straightdope.com/t/whats-with-the-paypal-pay-later-thing/695408/9 "2014-08-13T03:59:42Z")
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”. ---
**Author:** ![ThelmaLou](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/thelmalou/32/390_2.png) [@ThelmaLou](https://boards.straightdope.com/u/ThelmaLou)\ **Post date:** [August 13, 2014, 4:43am UTC](https://boards.straightdope.com/t/whats-with-the-paypal-pay-later-thing/695408/10 "2014-08-13T04:43:28Z")
> [@Mdcastle](#): > > You mean “Pay after Delivery?” > [https://www.paypal.com/us/cgi-bin/webscr?cmd=xpt/Marketing/general/PADLaunch-outside](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. \ ---
**Author:** ![bob\_2](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/bob_2/32/3341_2.png) [@bob\_2](https://boards.straightdope.com/u/bob_2)\ **Post date:** [August 13, 2014, 11:07am UTC](https://boards.straightdope.com/t/whats-with-the-paypal-pay-later-thing/695408/11 "2014-08-13T11:07:13Z")
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:) ---
**Author:** ![kayaker](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/kayaker/32/441_2.png) [@kayaker](https://boards.straightdope.com/u/kayaker)\ **Post date:** [August 13, 2014, 11:57am UTC](https://boards.straightdope.com/t/whats-with-the-paypal-pay-later-thing/695408/12 "2014-08-13T11:57:04Z")
[QUOTE= Tom Waits] “The large print giveth and the small print taketh away.” [/QUOTE] … ---
**Author:** ![Omar\_Little](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/omar_little/32/269_2.png) [@Omar\_Little](https://boards.straightdope.com/u/Omar_Little)\ **Post date:** [August 13, 2014, 5:55pm UTC](https://boards.straightdope.com/t/whats-with-the-paypal-pay-later-thing/695408/13 "2014-08-13T17:55:03Z")
You are also opening a credit account which will put a ding on your credit report, when you exercise that option. ---
**Author:** ![Chefguy](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/chefguy/32/138_2.png) [@Chefguy](https://boards.straightdope.com/u/Chefguy)\ **Post date:** [August 13, 2014, 6:23pm UTC](https://boards.straightdope.com/t/whats-with-the-paypal-pay-later-thing/695408/14 "2014-08-13T18:23:24Z")
> [@Exapno\_Mapcase](#): > > 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. ---
**Author:** ![Bones\_Daley](https://avatars.discourse-cdn.com/v4/letter/b/bc8723/32.png) [@Bones\_Daley](https://boards.straightdope.com/u/Bones_Daley)\ **Post date:** [August 13, 2014, 9:52pm UTC](https://boards.straightdope.com/t/whats-with-the-paypal-pay-later-thing/695408/15 "2014-08-13T21:52:44Z")
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 . > [@Mdcastle](#): > > You mean “Pay after Delivery?” > [https://www.paypal.com/us/cgi-bin/webscr?cmd=xpt/Marketing/general/PADLaunch-outside](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. ---
**Author:** ![Omar\_Little](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/omar_little/32/269_2.png) [@Omar\_Little](https://boards.straightdope.com/u/Omar_Little)\ **Post date:** [August 13, 2014, 9:59pm UTC](https://boards.straightdope.com/t/whats-with-the-paypal-pay-later-thing/695408/16 "2014-08-13T21:59:17Z")
They do have a credit line account, which is what the “Bill Me Later” program has become: > **[PayPal Credit | Your Always-on Credit Line](https://www.paypal.com/us/digital-wallet/ways-to-pay/credit-services/paypal-credit)** > > Shop in confidence with PayPal Credit. Your reusable credit line even features no interest if paid in full in 6 months. Check out the details and apply here. > [@PayPal](#): > > 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. ---
**Author:** ![usedtobe](https://avatars.discourse-cdn.com/v4/letter/u/ec9cab/32.png) [@usedtobe](https://boards.straightdope.com/u/usedtobe)\ **Post date:** [August 14, 2014, 7:11am UTC](https://boards.straightdope.com/t/whats-with-the-paypal-pay-later-thing/695408/17 "2014-08-14T07:11:11Z")
Wow! Only 20% now? How generous of them… ---
**Author:** ![ThelmaLou](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/thelmalou/32/390_2.png) [@ThelmaLou](https://boards.straightdope.com/u/ThelmaLou)\ **Post date:** [May 24, 2015, 8:09pm UTC](https://boards.straightdope.com/t/whats-with-the-paypal-pay-later-thing/695408/18 "2015-05-24T20:09:38Z")
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. ---
**Author:** ![usedtobe](https://avatars.discourse-cdn.com/v4/letter/u/ec9cab/32.png) [@usedtobe](https://boards.straightdope.com/u/usedtobe)\ **Post date:** [May 25, 2015, 1:06am UTC](https://boards.straightdope.com/t/whats-with-the-paypal-pay-later-thing/695408/19 "2015-05-25T01:06:04Z")
**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… ---
**Author:** ![Exapno\_Mapcase](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/exapno_mapcase/32/1051_2.png) [@Exapno\_Mapcase](https://boards.straightdope.com/u/Exapno_Mapcase)\ **Post date:** [May 25, 2015, 2:22am UTC](https://boards.straightdope.com/t/whats-with-the-paypal-pay-later-thing/695408/20 "2015-05-25T02:22:02Z")
> [@usedtobe](#): > > **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. > [@usedtobe](#): > > 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”. [Next page](https://boards.straightdope.com/t/whats-with-the-paypal-pay-later-thing/695408.md?page=2)