PayPal Hidden Issues Revealed

  • Online interest free payment options demand continues to grow.
  • Paypal launched pay in 4 option.
  • It is hard to get a refund with the pay in 4 option.

At present, there is a demand to purchase online and pay later. The platforms like Klarna  Quadpay and AfterPay  becoming increasingly popular. They allow the consumers to purchase items from a large number of the online stores using interest free payments split in 4. The payments are billed every 2 weeks.

The Klarna main Page.

Therefore, the consumer gets 60 days to pay off the purchases without having to worry about interest, in comparison to the credit cards that allow 30 days to pay off the purchases without being charged interest.

PayPal decided to expand the products offered to include the 4 interest free payments option.  During the online checkout process, the customer can choose to pay with paypal and the drop down menu offers an eligible clients to pay in the 4 increments.

The e-commerce platforms continue to grow and the demand for the online payment services continue to increase. During the Coronavirus pandemic the shopping habits of the consumers changed.  PayPal is one of the most popular online payment systems that has expanded and partnered with many platforms.

PayPal Holdings, Inc. is an American company operating an online payments system in the majority of countries that support online money transfers, and serves as an electronic alternative to traditional paper methods like checks and money orders.  PayPal is accepted by AliExress , Ebay and many online merchants.

The largest online platform Amazon does not accept Paypal. Amazon has its own AmazonPay, which you can use to pay for products outside of the Amazon platform. Alibaba Group, which is the biggest e-commerce company in China accepts PayPal, even though it has its own AliPay payment option.

There are issues associated with choosing to split the payments via PayPal. For example, the sites like coachoutlet  are notorious for allowing the customer to add items in the cart, which are sold out.

Hence, when a customer chooses the option to pay in 4 via paypal, the automatic authorization with the first payment immediately appears on the debit/credit card, but the order won’t be fulfilled, as the item is sold out.

The authorization hold on  paypal will  remain for the 72 hours and will drop off automatically, if the purchase is not completed. Nevertheless, it seems like an easy use, not so fast.

The PayPal logo

The scenario described with coachoutlet immediately puts the paypal account holder in the “unusual activity” scenario. What does it mean, it means for the 72 hours the paypal customer can’t make other purchases with this method and also the account would flag other transactions. In the case of the latter, the confirm option can avoid the further lock on the account.

Moreover, if the purchase is made pay in 4 at the Aliexpress, the customer might never recoup the funds paid out. As refunds are very hard to get on the Aliexpress and it is almost impossible to cancel pay in 4 transaction.

The convenience of the pay in 4 might be enticing, but there are certain unpleasant consequences that can result after use.

Therefore, when using paypal pay in 4 options, make sure the online purchases should be only from the vendors that are trusted.

Christina Kitova

I spent most of my professional life in finance, insurance risk management litigation.

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