PayPal joins buy-now-pay-later: Which one is the best?

A woman holds up her online purchase and the PayPal logo in the corner.
PayPal gears up to tackle Afterpay with a new buy-now-pay-later product (Source: Getty)

PayPal announced it would be entering the buy now pay later (BNPL) industry for all eligible Aussie customers.

According to there are now 13 BNPL options available in the Australian market:

  • Afterpay

  • Zip Pay and Zip Money

  • Humm & Bundll

  • Openpay

  • CommBank BNPL and Klarna

  • PayPal Pay in 4

  • Laybuy

  • Latitude Pay

  • Brighte

  • PayRight

  • Sezzle

  • Pay It Later

  • Fupay

This is how the most popular BNPL options compare.


The new BNPL service is now available to eligible PayPal Australian customers across its base of over 9 million active accounts.

It also has no PayPal fees, no interest, no late payment fees and no sign-up fees.

This is the most major difference from the most popular, Afterpay, which charges a flat rate late fee of $10.

It also doesn’t have one maximum borrowing limit for its customers, opting to determine this on an individual basis instead.

Chart comparing PayPal and Afterpay
(Source: RateCity)

“PayPal might be entering a crowded market but it’s coming in with an existing customer base of over nine million Australians. That’s going to count for a lot,” research director, Sally Tindall, said.

“With millions of people to market to, and with a new zero fee proposition, this new platform is likely to be a serious contender in the buy now, pay later space,” she said.

On the flip side, despite not charging fees, users need to be aware that missing payments or defaulting could end up on your credit score instead.

“The big question is whether PayPal’s new service will prompt people to switch buy now, pay later providers or encourage them to use multiple platforms at once,” Tindall said.


Afterpay is the largest BNPL platform in AUstralia and has 3.4 million active customers.

Afterpay has no credit checks when you sign up and a $500 to $1000 credit range. You have to pay for 25 per cent of the payment upfront.

If customers miss a payment they are charged a $10 late fee and then $7 after that to a cap of $68 or 25 per cent of the purchase price (whichever is lower).

Zip Pay and Zip Money

Zip is the second biggest BNPL platform in Australia, and actually has two separate BNPL brands - Zip Money and Zip Pay.

Zip Money is for larger purchases over $1,000 and Zip Pay for purchases under $1,000.

Zip in total has 2.5 million active customers as of January 1 2021 and is offered by more than 34,000 different stores and merchants.

Zip charges a $5 late fee, a $6 monthly account fee, but you don't have to pay this if you have no outstanding balance, and a $40 a month in minimum required payments.

CommBank BNPL

That’s right, even the Commonwealth Bank of Australia (CBA) has a BNPL offering, Klarna.

Only available to CBA customers Klarna is lined to the CBA customers bank accounts and can be used anywhere the CBA debit or credit card is accepted.

Klarna can only be used for purchases over $100 and there is no interest charges, monthly or annual fees.

A late fee of $10 applies for each missed payment and a credit limit of $1,000 applies.

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