PayPal’s New Pay After Delivery Service Twists Its Model

PayPal has started contacting its customers touting a feature called Pay After Delivery, which puts a new twist on its payment system. PayPal is pitching it as letting shoppers “get your items before you pay at no extra cost.”

The way the service works is that shoppers order the item, select Pay After Delivery during checkout and PayPal immediately pays the retailer. “We’ll send you a reminder first and then deduct the money from your bank, 14 days after purchase,” PayPal said.

The idea is that it will feel like an interest-free 2-week loan.

Everyone is trying to make their digital accounts more useful to consumers so that frequency of use is established and consumers develop both a habit and a preference for using those accounts. Some of those tactics involve increasing merchant acceptance and others involve offering rewards or incentives,” said Market Platform Dynamics CEO Karen Webster. “PayPal’s Pay After Delivery service is designed to establish preference by essentially enabling short term credit for qualified purchases made using its payment method. Merchants are paid right away, so this isn’t coming out of the merchant’s hide. PAD seems a focused strategy to differentiate PayPal and make it more to consumers than just a convenient and secure way to pay online and in stores.”