Customer financing: how PayPal Pay Later could help make or break a sale

Aug 10 2022 | Julie Warshaw, PayPal Editorial Staff

When shoppers know they can buy what they want with just a fraction of the total due at the time of their transaction, they may be more likely to make a purchase.

If you’re questioning how to offer financing to customers without leaving yourself out of pocket, there’s a simple answer: ‘buy now, pay later’.

This kind of customer financing allows shoppers to pay over time, while your business gets paid in full upfront. PayPal offers two Pay Later customer financing options: Pay in 41 lets customers split smaller purchases into four interest-free payments, while Pay Monthly2 allows them to spread the cost of bigger ticket items over a longer period of time – both at no extra cost to your business.

When it comes to customer service and flexibility, finding a way to offer financing to customers is a no-brainer – after all, creating a business that keeps up with customer behavior is key to keeping the sales rolling in.

How does Pay Later work?

Let’s take a look at the nuts and bolts of Pay Later solutions so you can see what the experience will be like.

1. Why should I offer Pay Later solutions?

Customers have more options than ever before. To stand out among competitors and keep up with shopping trends, providing flexibility in how your customers pay with digital methods like customer financing will be key to attracting customers – and keeping them coming back. In fact, 64% of consumers are more likely to make a purchase with a retailer that offers interest-free payment options.3

2. How do I compare third-party financing providers?

Make sure you compare your different provider options to find one that fits your business. Third-party customer financing options can range from a local bank to your current payment processor, so your existing providers are a good place to start. That way, you may not have to add another vendor to manage.

Compare costs first when looking at financing providers. Some providers may require monthly payments to offer financing, while others may only charge a fee per transaction. Also, check for startup fees and integration costs, along with any other fees that may be charged. Each of these fees can add up over time, impacting your margins.
Look for a provider that is easy for customers to use, has low or no customer fees, and a speedy application process. It should be able to display a customer’s payment schedule at checkout so they know how much they will owe and when. An ideal financing option should have no cost to the customer, provided they pay it back on time, making it a cost-effective solution.

3. How do I choose a payment solution?

Once you decide on a customer financing provider, keep in mind that not every financing option they offer will make sense for every business. Depending on your product mix and average customer order size, you may find that giving shoppers a chance to pay in installments is the best fit.

For example, Pay in 41 gives customers a way to pay for lower ticket items in short-term installments, spreading the purchase into one down-payment and three interest-free transactions. With Pay Monthly2 on the other hand, customers can buy big ticket items and spread the purchase over a longer period of 6, 12 or 24 months. Both options offer financing to customers at no extra cost to you, and allow your customers choice and flexibility in how they shop.

It's important to note that not all installment financing options are available in all countries. Even some U.S. states may have regulations around buy now, pay later services. Check with your provider to ensure it can serve the markets where your audience tends to shop.

4. How do I integrate customer financing?

Many providers have pre-built integrations that let you offer financing with just a few clicks. If you're already on an ecommerce platform, check to see if there is an existing integration between your payment provider and commerce platform. Otherwise, you may need to implement a separate provider.

With PayPal Pay Later, you automatically have access to the millions of users already in our network. Since these shoppers already have an account with PayPal, the underwriting process for Pay Later products is efficient. This decision-making process evaluates shoppers’ financial positions using the information collected at application, including, where appropriate, external data from credit reporting agencies, and usage and history with PayPal. By simply selecting the PayPal Pay Later option at checkout, customers can get what they want, when they want it – and spread out the payments over time.

5. How can I optimize the financing experience?

Once customer financing is integrated into your store, make sure you’re catching shoppers’ attention by displaying financing options. You should have messaging on each product page that automatically calculates and displays installment payments for a given item. This lets shoppers know exactly what they will owe for each payment period while helping your product appear more affordable.

6. How can I promote my financing options?

Although it's growing in popularity, not every retailer offers customer financing. This gives you a chance to attract shoppers who are in the market for what you sell but might not have the cash on hand to pay for it. In addition to displaying your financing options across your site, include them in marketing materials such as email, social media posts, direct mail, search marketing, and even in-store signage.

More than ever customers are looking for flexible customer financing they can trust. Find out how Pay in 41 and Pay Monthly2 can help you increase your sales, and give your customers more choice and flexibility.


  1. About Pay in 4: Loans to California residents are made or arranged pursuant to a California Financing Law License. PayPal, Inc. is a Georgia Installment Lender Licensee, NMLS #910457. Rhode Island Small Loan Lender Licensee.
  2. Pay Monthly is subject to consumer credit approval. 9.99-29.99% APR based on the customer’s creditworthiness. PayPal, Inc.: RI Loan Broker Licensee. The lender for Pay Monthly is WebBank.
  3. Online study commissioned by PayPal and conducted by Logica Research in May 2020 involving 2000 US consumers, half were PayPal Credit users and half were non-PayPal Credit users.

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