Payment by instalments with PayPal – this is how it works

by Michaela

Payment by instalments with PayPal allows you to make larger purchases when shopping online in monthly instalments. In participating online shops, you can choose “Payment by instalments powered by PayPal” as a payment method. We will show you how this works.

PayPal instalment payment: only in participating shops

Not every retailer offers the payment option by instalment. However, if a seller wants to offer this option to his customers, the PayPal service is the solution in many cases.

  • For some time now, online shops have been able to offer payment by instalments via PayPal as a payment method.
  • Using the customer’s name, date of birth and bank details, the creditworthiness of the customer is checked in real time and the instalment payment is approved.
  • There is no risk for the merchants through the payment by instalments; this risk lies exclusively with PayPal. The group pays the entire amount to the merchant and then takes care of collecting the payment from the customer. PayPal therefore lends you the money.
  • For this, the merchants pay fees to PayPal. There are no additional fees for the customer, but the online shops pass on their costs to you via a certain interest rate for the instalment payment.
  • You can pay in instalments over 3, 6, 12, 18 or even 24 months. As a rule, the shorter the term, the lower the interest. However, the instalments are higher. It is worthwhile to do some calculations to find out which option is best for you.
  • If you would like to pay off the remaining amount early, this is possible. Special payments are also an option to shorten the term.
  • You can link the payment of the individual instalments to your PayPal account. This way you always have an overview of how many instalments are still due and what amount is outstanding. In the best case, the instalment will then also be debited from your PayPal balance.

How the PayPal instalment payment works

Many merchants now offer the payment option by instalment. The payment works very simply, you do not need an extra PayPal account for it:

  • Place an item in the shopping basket and select the payment method “Payment by instalments powered by PayPal” at the checkout.
  • You will be asked to provide your name, address, date of birth and bank details. PayPal then checks your ability to pay, for example via credit agencies such as Schufa.
  • On completion of the purchase, the provider receives the full amount from PayPal. PayPal in turn debits the amount from your account on a monthly basis.
  •  By the way, the minimum order value for an instalment payment with PayPal is 99 euros. However, the purchase amount must not exceed 5,000 euros in order to be able to use the Paypal payment by instalments.


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