PayPal Pay in 3 UK guide (2024)

If you shop or spend online you’ve likely come across buy now pay later (BNPL) payment options. One such option is PayPal Pay in 3.

But what exactly is Pay in 3, how does it work, and is it the best choice for making online payments?

We’ll answer these questions and more in this handy guide. Before we dive in, let’s start by understanding what a buy now pay later service is.

What is a buy now, pay later service?

Buy now, pay later (BNPL) is a financing option that allows consumers to pay for purchases at a future date. These finance options tend to be short-term and mean that you can split the cost of purchases over a few months.

Examples of other providers offering BNPL services include Klarna, Affirm, and ClearPay, to name a few. But there are many more in the UK, having soared in popularity over the past few years as an affordable, short-term way to extend consumer purchasing flexibility.

In fact, in 2023, it was estimated that one in four UK adults¹ chose to use a BNPL service to help with their seasonal festive spending.

And some airlines and travel agencies now accept buy now pay later services for flights and holiday bookings, often referred to as fly now pay later or book now pay later services.

What is PayPal Pay in 3?

In a nutshell, PayPal Pay in 3 is a buy now, pay later service. It’s a way to split the payment for a purchase into three interest-free payments². So instead of paying the full total upfront, you can pay in chunks spread out over three months.

Think of it as an interest-free loan on whatever you’re buying, which in some cases could make it more affordable. However, it is still a form of credit, so it’s not suitable for everyone and you need to make sure you can afford the repayments.

Is PayPal Pay in 3 available in the UK?

Yes, the PayPal Pay in 3 service is available in the UK. It was rolled out to personal customers in October 2020³ in response to similar services such as Klarna and ClearPay.

Who is eligible for PayPay in 3?

The service is for eligible UK residents aged 18 and over. Eligibility depends on the automated checks that PayPal will need to make based on information they hold about you, such as your existing account history with them, and the information you sign up with. However, in some cases they will run a “soft” credit check⁴, though this should not affect your credit score.

How does it work?⁴

You can choose to pay for a purchase with PayPal Pay in 3 by checking out as normal. If the transaction is eligible, Pay in 3 will appear as one of the available payment methods.

Once you’ve selected it as your preferred payment method, you can apply for a PayPal Pay in 3 plan. This only takes a moment, and you’ll get an instant decision. If accepted, you can finish checking out.

You’ll make the first of your three payments right away. The remaining two payments will come out automatically every month on the same date².

Is it the same as PayPal in 4?

No. PayPal in 3 is the UK equivalent of PayPal in 4. Those in the UK are not eligible for PayPal Pay in 4 because it’s for US residents only. It works much in the same way but with - you’ve guessed it - four payments. This is because those in the US tend to be paid fortnightly, rather than monthly like in the UK.

Online stores that accept PayPal Pay in 3 in the UK

Not every online retailer accepts PayPal Pay in 3, which is why some transactions won’t be eligible to use the service.

However, PayPal says you can use Pay in 3 at millions of online stores, and the list includes²:

• ASOS
• Boots
• M&S
• Asda George
• B&Q
• Screwfix
• French Connection
• Robert Dyas
• Ryman
• Joules.

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Are there UK purchase limits with Pay in 3?

There are some limits to how much you can spend using this buy now, pay later service. You can only use Pay in 3 on purchases between £30 and £2,000².

Does PayPal Pay in 3 affect credit score in the UK?⁴

When you apply for PayPal Pay in 3 at checkout, a soft credit check may be carried out using an external credit reference agency. This shouldn’t affect your credit score in any permanent way.

But if you do use the service, PayPal will update credit agencies on whether you meet or miss your payments. This could affect your UK credit score.

How does PayPal in 3 differ from a credit card?

Both PayPal in 3 and credit cards allow consumers to make purchases and pay for them in several instalments. However, with a credit card there is a monthly minimum payment required, whereas with PayPal in 3, the monthly payment amount is a third of the purchase cost.

Making international purchases? Check out the Wise multi-currency account

PayPal is not the only payment solution in town, and it’s not always the cheapest for things like international payments. With PayPal, you need to link the card you wish to use for international payments, meaning your card issuer will be the one to determine the foreign exchange rate on your transaction.

If you need to pay for an overseas purchase, or send money abroad, you could use the Wise multi-currency account instead. It’s fantastic for transactions in other currencies, offering a fair exchange rate and low fees*.

You can send, spend, convert and receive international payments in just a few taps.

See how Wise works below 👇

Sources used for this article:

Sources checked and updated on 15-04-2024.