How does PayPal Pay in 4 work? Here’s everything you need to know before signing up

woman in yellow jumper sits on couch looking at her phone while holding her credit card online shopping using paypal buy now pay later pay in 4

If you’ve ever made an online purchase, you’re probably familiar with PayPal. The payment platform offers a simple way to pay for items without having to provide your card information directly to the merchant.

Now, the digital payment giant has entered the Buy Now, Pay Later (BNPL) space with PayPal Pay in 4 - offered to its over 9 million active users in Australia, available everywhere you see the PayPal button. 

And it won 3 awards in the annual 2022 Mozo People's Choice Awards for Buy Now Pay Later, picking up titles for Outstanding Customer Satisfaction, Value for Money and Most Recommended! 

While the idea of buying what you want and paying for it later sounds great, it’s important to know the ins and outs of what you’re really signing up for. So, if you’re looking for more info, Mozo is breaking down the must-knows of PayPal Pay in 4.

What is PayPal Pay in 4?

PayPal Pay in 4 is a BNPL service that allows you to purchase an item online priced between $30 - $2000. When you buy the item, PayPal pays the merchant upfront and then charges you the first of four equal instalments. You then repay PayPal fortnightly until the balance is cleared.

As a result, you get to enjoy the purchase immediately while paying it off over six weeks or four interest-free instalments.

Who offers PayPal Pay in 4?

PayPal Pay in 4 has been added as an additional option to eligible customers’ existing PayPal wallets. As PayPal is already so integrated into the way people shop online, it is now available as a BNPL option at hundreds of thousands of Australian and millions of global online stores.

Some online shops also have a PayPal Pay in 4 payment option directly clickable at checkout. These include The Good Guys, JB HiFi, Temple & Webster, Witchery, EB Games, Myer and more!

How do I sign up?

To use PayPal Pay in 4 for the majority of online retailers, you need to set up a PayPal account through the PayPal website. This will require your basic information, along with your card info and home address. You can also choose to link your bank account directly, but you will need to go through a confirmation process to use it to pay for purchases online.

How do I pay with PayPal Pay in 4?

PayPal Pay in 4 is a digital BNPL product, available everywhere online you can pay with PayPal.

If you have a PayPal account in good standing, you can then select the Pay in 4 option from your wallet at checkout. Under other circumstances, you will need to apply for Pay in 4, but decisions are instant.

Do I need a credit card to use PayPal Pay in 4?

No, you do not need a credit card to use PayPal Pay in 4. You can link your debit card or bank account to your PayPal wallet. You can then make automatic instalment payments from your nominated card or bank account.

Does PayPal Pay in 4 charge interest?

PayPal Pay in 4 does not charge interest. Your purchase is divided into four interest-free payments spread over six weeks. 

Does PayPal Pay in 4 charge late fees?

No, PayPal Pay in 4 does not charge late fees.

What happens if I miss a Pay in 4 payment?

PayPal advises that if you know that you will not make a scheduled payment, reach out to them in advance.

If you miss a Pay in 4 payment instalment, the PayPal BNPL option will no longer be available. It remains frozen until the balance is paid.

In more extreme cases where a balance remains unpaid for a long time, you may lose the ability to use other PayPal services.

Can PayPal Pay in 4 impact my credit rating?

In short - yes, it can.

When you first apply to Pay in 4, PayPal may perform a credit check to ensure you are a credible customer to use the BNPL service. From there, if you miss payments, this could have adverse consequences, including PayPal taking legal action against you and/or reporting the default information to a Credit Reporting Body (CRB) which may impact your credit.

However, as long as you use PayPal Pay in 4 responsibly and make your repayments on time, you shouldn’t need to worry about it impacting your credit rating.

How do I make repayments?

Unless you want to pay off your item early, you don’t need to do anything to make repayments.

At the time of purchase, PayPal Pay in 4 charges you the first of four equal interest-free payments. The following three instalments are then automatically scheduled fortnightly over six weeks to be paid via your nominated method in your PayPal account.

Is PayPal Pay in 4 safe and secure?

Like other popular Buy Now Pay Later services, PayPal Pay in 4 is subject to the Privacy Act 1988 (Cth), plus the Australian Privacy Principles (APPs) and, wherever necessary, the Privacy (Credit Reporting) Code 2014.

These laws outline the standard rights and obligations BNPLs have around their customers’ personal information and the way it is used, including the collection or disclosure of information to governance.

You can learn more about how BNPL services protect and store your personal details by having a read of our Buy Now Pay Later safety and security article.

What's the verdict?

If you’re an existing PayPal customer or you’re just in the market for a convenient Buy Now Pay Later option for small to medium-sized purchases, Pay in 4 could be a good option for you.

As long as you do not purchase items outside of your budget and keep up with instalment payments, it is a viable alternative to credit cards, enabling you to avoid interest and late fees altogether. 

Just keep in mind that there are consequences to late payments that could affect your credit score, and therefore have a long term impact on your ability to get credit in the future.

What are alternatives to PayPal Pay in 4?

In Australia, there are many options when it comes to selecting a BNPL provider. There are the big go-to BNPL platforms, such as Afterpay and Zip, specialised providers like Brighte, as well as 0% interest credit cards, which operate similarly to those BNPL providers. These cards, offered by some banks and institutions, allow you to pay off purchases in instalments.

If you’re looking for more info on BNPL options, head to our BNPL comparison page or check out our best BNPLs in Australia this month for Mozo Expert Choice Award Winners.