Verdict: Do you want to make a purchase or provide a service, but want to receive a bill later? PayPal offers a “bill me later” feature whereby customers and service providers can pay later. This is useful for those managing their books on a specific schedule and for those who don’t want to wait until payday to make purchases. Users offering the “bill me later” feature on their websites, though, must adjust to the fact that payments are not as quick (in some cases, instant) as a typical PayPal payment. For customers, the service is just as easy as a credit card, with no pre-approval process.

Overview: I’ve been using Paypal since 2000 as a merchant, and have seen a lot of useful tools come down the pike. This service benefits merchants because, as business owners know, you have a better chance of closing the sale if you can close right away — even if it means waiting a little bit longer for your money.

If a customer has to wait for payday to make a purchase, they might not come back. That’s the convenience of credit cards, of course, and one of the major benefits — interchange fees not withstanding.


However, with a credit card, merchants don’t have to wait for the payment. Still, this service offers the pay-me-later convenience of credit with the security and reputation of of PayPal.

Benefits for customers include the fact that there’s no pre-approval process to use the service, although transactions can be declined at the discretion of the creditor, WebBank.

How This Website Works: “Bill me later” was purchased by PayPal in 2008, so while it’s still new to some people, it’s been around for a few years. Customers are able to use the feature similar to using a credit card. Customers must enter their date of birth and for the last four digits of their social security number. Customers must accept the terms and conditions prior to using the service. The service is currently offering a promotion of no interest/no payments until June 2011.

Using the system is simple. All consumers need to do is scroll to where they read, “More Funding Options,” and click. Customers also can go to their PayPal profiles and update their preferencesso that all future purchases are made using the “Bill Me Later” feature. Customers can make purchases conveniently and receive a bill for items after they’ve been shipped. This option can be changed at any time.

You don’t have to pay interest right away:

1. Make purchases
2. Items are shipped
3. Bills are sent following shipping
4. Pay no interest and make no payments on purchases until June 2011, thanks to a special promotion


Payments and Fees: The standard APR for Bill Me Later is 19.99%, with a minimum finance charge of $2. Late charges are up to $5 for payments of $25 or less, and up to $35 for payments over $25.

If you think the Bill Me Later service sounds very similar to a credit card, you’re right. The biggest difference, however, is customers do not have to be pre-approved before using the service. The catch? Customers may be declined during any transaction based upon approval given by WebBank.

Essentially, Bill Me Later is a line of credit extended at WebBank’s discretion and functions almost like a charge card. Each time you make a purchase, your buying power (or the possible line of credit) increases. The more you spend, as long as you make your payments on time, the more you’ll be permitted to spend.

Pros:

  • No annual fee
  • No credit limit: the more you spend, the more you’re allowed to spend
  • No interest until June 2011 on purchases made now
  • Fraud protection
  • Easy online bill pay
  • The security of Paypal and the convenience of a credit card
  • Accepted at more than 1,000 online merchants

Cons:

  • High 19.99% APR on purchases
  • Transactions may be declined at any time at the lender’s discretion
  • Cannot pay Bill Me Later bills with another credit card
  • Not accepted everywhere that takes Paypal