What is PayPal's Pay in 4?

PayPal Pay in 4 displayed on two smartphones on a green background
(Image credit: PayPal)

If you want an item now, but you don't want to pay the full amount up front, then PayPal's Pay in 4 could be an attractive solution. 

As the name suggests, it allows PayPal users to spread out the payments for any goods or services bought online. You simply apply for short-term credit when you're checking out, and then pay off the cost over four installments.

Since it launched in late 2020, Pay in 4 has proven popular, claiming, in theory at least, to help you stay in control of your budget. It has also joined a growing number of other so-called Buy Now, Pay Later (BNPL) installment-plan services — the most prominent being Klarna, Afterpay, Affirm, Clearpay, Settle and Laybuy. Apple also just announced its competitor to Pay in 4 at WWDC 2022. Apple Pay Later will be coming to the Apple Wallet app with iOS 16.

But is Pay in 4 right for you? Let's take a look.

How to apply for Pay in 4

Pay in 4 is available in many U.S. states and in Australia. Millions of retailers offer the ability to buy items using the service, including Best Buy, Bose, Sonos and Target. 

To apply for Pay in 4's short-term credit, you must be at least 18 years old or the age of majority in your state and have a PayPal account. If so, then the process is pretty straightforward.

1. After you have added items to the online retailer's cart, go to the checkout and click the PayPal option Pay Later.

Screenshot showing the steps for PayPal Pay in 4

(Image credit: PayPal)

2. Sign into your PayPal account when prompted.

Screenshot showing the steps for PayPal Pay in 4

(Image credit: PayPal)

3. Select Pay in 4, which should be listed as an option.

Screenshot showing the steps for PayPal Pay in 4

(Image credit: PayPal)

Screenshot showing the steps for PayPal Pay in 4

(Image credit: PayPal)

4. You can now view your payment plan. If you are fine with it, click Continue. Once you've confirmed your details, your application should be instantly approved.

Screenshot showing the steps for PayPal Pay in 4

(Image credit: PayPal)

How much is PayPal's Pay in 4 going to cost me?

PayPal Pay in 4

(Image credit: PayPal)

Absolutely nothing. One of the big benefits of Pay in 4 is it makes its money by charging the retailer a small fee for enabling the transaction. You don't get charged a penny, so you're getting an interest-free loan. It's one of the few installment plans that doesn't cost the buyer anything extra.

You don't need to pay any set-up fees, and there are no late fees, either. You simply have to pay your first installment right away and then pay off the rest on the dates that are set. 

Those payments are taken from the debit card, credit card or bank account you specified when you applied for Pay in 4. Oh, and applying doesn't affect your credit score either — Pay in 4 only makes a soft credit check.

Can I use my PayPal balance to repay the loan?

No. You need to make sure there is sufficient money available on your cards or in your bank account. If a payment doesn't go through, the debt wouldn't suddenly get wiped. You'd still be expected to stump up for the cost of the item or service.

How regularly do I need to pay back?

You have to make the three remaining payments every two weeks. This timescale is handy for many Americans, who get paid every two weeks, and it means that the short-term loan is done and dusted within six weeks. 

The actual dates and amounts you need to pay are clearly detailed when you apply for Pay in 4. You can, however, make extra or unscheduled payments. You could even log into your PayPal account and pay the whole thing off at once if you're feeling flush.

Is there a spending limit for Pay in 4?

You can't use Pay in 4 if your purchases amount to less than $30, and your shopping cart value cannot exceed $1,500.

What if I don't like what I've bought?

First of all, you will have Purchase Protection from PayPal on any items you buy using Pay in 4. But if you simply want to return an item or cancel a service, you go about it in the same way as you always would: by contacting the retailer or the service provider. 

It is up to either of them to refund your money. If they don't do so quickly, you will have to keep making your Pay in 4 payments in the meantime.

Can I use PayPal's Pay in 4 in the United Kingdom?

PayPal Pay in 3

(Image credit: PayPal)

Yes — well, kind of. PayPal in the U.K. doesn't actually offer Pay in 4. Instead, it offers you Pay in 3. In other words, you'll have to spread your payments over just three installments.

While that may sound a bit mean, PayPal doesn't expect you to make a payment every two weeks. Because most people in the U.K. get paid monthly, you'll be making payments on the same date each month. Lots of U.K. retailers have already signed up with Pay in 3.

If you like the sound of Pay in 4 (or Pay in 3), you'll need to know how to set up a PayPal account. You might also be asking is PayPal safe to use? and we can also help explain the difference between PayPal Goods and Services and PayPal Friends and Family.

David Crookes is a freelance writer, reporter, editor and author. He has written for technology and gaming magazines including Retro Gamer, Web User, Micro Mart, MagPi, Android, iCreate, Total PC Gaming, T3 and Macworld. He has also covered crime, history, politics, education, health, sport, film, music and more, and been a producer for BBC Radio 5 Live.