What is Bill Me Later and How it Works

While The World continues to be in financial turmoil and more and more credit card companies tightening their approvals and slashing credit limits, even for those who can afford to use them, credit card use declined dramatically in 2009. But people still want to buy things without paying for them right away and it turned out there was already a company out there ready to step and fill the gap and offer the consumers possibility to purchase products now and pay them later.

Acquired by PayPal in 2008, Bill Me Later is financing option offered by several e-commerce sites, including Wal-Mart,Amazon,Ebay, JetBlue Airways, USPS, and many more.

Bill Me Later is essentially a replacement for a credit card that offers instant approval on the sites of online retailers. It works because the credit bureau infrastructure is so well developed that the company can approve credit lines in less than thee seconds based on little more than identifying information. 

Bill Me Later is a PayPal service that lets you buy now and pay later. It’s a secure, instant, and reusable credit line.  When you check out with Bill Me Later, you can pay for your purchases in 2 simple steps—just enter your birth date and the last 4 digits of your Social Security number and accept the terms. 

To add Bill Me Later to your PayPal account, you can link it at www.billmelater.com/linkpaypal.  

The service integrates with online stores. After customers enter their shipping address they are offered a choice of how to pay. If they select “Bill Me Later” it asks for their birth dates and the last four digits of their Social Security numbers. That is enough to look up customers’ information at credit bureaus and make a decision on whether to approve them. Customers receive a bill in the mail. They can pay in full, or pay over time with interest, just as with any credit card. Indeed, if customers use Bill Me Later on other sites, their purchases are all listed on one bill.

It is aimed at high-income, credit-worthy customers who are shy about entering credit card numbers online, a surprisingly large group. For merchants, it not only brings in new customers, but it saves money too. Bill Me Later charges retailers an average of 1.5 percent of transactions, compared to over 2 percent for other credit cards.

It is a remarkably low-cost operation. The company has attracted more than 3 million customers, spending less than $6 on average per account in marketing. Banks these days spend several hundred dollars per MasterCard or Visa they issue. And the company’s operating costs are lower too because 80 percent of its customers pay their bill at its Web site.

Bill Me Later represents the third most common payment method, after Visa and MasterCard and ahead of American Express. And it has arranged a credit line of up to $1 billion with Citibank to cover the money it lends. Inc. Magazine listed the Bill Me Later as the sixth fastest growing private company in the country, with revenue last year of $54 million.

How to get Bill Me Later account?

There are a few ways you can apply for a Bill Me Later credit line:

• Apply now by going to Bill Me Later page.
• On PayPal.com: Log in to your PayPal account and apply for a Bill Me Later credit line.
• During checkout at an online store: Look for Bill Me Later when you check out at any of the 1,000+ stores that accept Bill Me Later.

Use Bill Me Later with PayPal

The next time you check out with PayPal, select Bill Me Later as your payment method. A new window will appear on your screen asking for your birth date and the last 4 digits of your Social Security number. Once you accept the terms, the approval decision takes just seconds. 

If approved, Bill Me Later will be added to your PayPal account automatically. If you have a Bill Me Later account and also a PayPal account, link them together. Once you do, you’ll be able to use Bill Me Later at most places PayPal is accepted, manage your accounts in one place through PayPal.com, and even pay your Bill Me Later bill with your PayPal balance. 

Good think is there is no annual fee for using Bill Me Later. However the Annual Percentage Rate is 19.99%.  which is quite a big amount , but that's  the price for buying now and paying later. The Minimum Interest Charge is $2.00 and of course, the users can choose to pay your entire balance by the payment due date and not incur interest charges.

Also PayPal, the owner of Bill Me Later is enabling small and medium-sized merchants to offer Bill Me Later as a financing option for online transactions. Consumers can get no-interest financing for six months on purchases of $99 or more. The move should help small businesses by increasing order sizes and conversions.

For merchants who participate, they will be able to offer Bill Me Later as an option at checkout and will get paid right away from PayPal. There is no upper limit for how much people can finance using Bill Me Later, and the transaction is approved or denied within about one minute. If a consumer takes longer than six months to pay off their purchase, they will pay an annual percentage rate of 19.99 percent.

PayPal is also providing business owners with 18 different types of banner ads that can be easily inserted into their home page or check-out page to highlight the Bill Me Later option.

This should be helpful for consumers who might be a little hesitant to make bigger purchases due to the tough economy. 
For businesses, offering Bill Me Later could push someone to add a few more items to their shopping carts if they’re short of a the $99 threshold. Forrester Research found that 43 percent of Bill Me Later sales are in addition to regular online sales and offering Bill Me Later boosted average order sizes by as much as 75 percent.