PayPal will no longer charge customers for making late Buy Now, Pay Later (BNPL) payments.

The change will take place on October 1 for US, UK, and French customers.

German and Australian PayPal customers are already not subject to late fees for BNPL services.

The majority of Gen Z and Millennial shoppers favour BNPL according to the payments giant; 57 per cent said it was a “smarter way to shop” and 37 per cent said it gave them “more control of their finances” in its statistics.

Almost a third - 33 per cent - of consumers said that no late fees are an important feature when choosing a BNPL option according to PayPal’s research.

Competition is increasing in the BNPL space; in July, Visa released BNPL APIs, which allow its credit card issuing partners to develop and pilot their own instalment payment programmes.

BNPL payments accounted for 3.6 per cent of UK online sales last year, according to research commissioned by BNPL company Klarna in March.

“Building on the success of our “Pay in 4” launch in Australia without late fees, we know that eliminating late fees delivers an even better BNPL experience that provides incredible value to our consumers and merchant partners,” said vice president of global pay later products at PayPal Greg Lisiewski. “We’re able to help provide consumers peace of mind as they manage their plans on their terms while also helping merchants increase sales conversions.”

He added: “This change is closely coupled with PayPal’s mission and values as we seek to remove hurdles that provide financial services to customers of all types while helping our merchant partners succeed in the changing retail landscape.”

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