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Smart Money

What is Zip? (Formerly QuadPay)

What is Zip? In short, it's a buy-now, pay-later program that lets you pay for something over time, instead of all at once.

Jackie Lam • December 15, 2021

In This Article

  1. What Is Zip and How Does it Work?
  2. What Stores Accept Zip?
  3. Does Zip Affect my Credit?
  4. Zip vs. AfterPay
  5. Zip Vs. Klarna
  6. Zip FAQs
  7. Final Thoughts

So you’ve got your eye on something but don’t have the cash to spare. Buy now, pay later programs like Zip (formerly QuadPay) can help you make purchases without reaching for the plastic or waiting until payday rolls around and the money hits your bank account.

Let’s take a look at how Zip pay works, and what it means to buy now, pay later.  

What Is Zip and How Does it Work?

Zip is an online platform that offers flexible financing for shoppers. In a nutshell, the buy now, pay later (BNPL). In turn, you don’t have to put things on layaway.

Launched in 2017 and headquartered in New York City, to date Zip is in 12 countries, has served more than 7.3 million customers, and works with more than 51,000 merchants globally.

What is Quadpay? Well, it’s actually now Zip. In the summer of 2020, the global payment company Zip acquired Quadpay. Hence the name change from Quadpay to Zip.

Zip isn’t a loan or a credit card so you don’t have to pay interest. And it offers options to make purchases that work best with your budget. So if your direct deposit is a few days away, you can buy that item. Zip’s standard schedule works like so: you make four payments over a six-week period, with the first payment due at checkout. The remaining three payments are due every other week. Payments are made automatically through the payment method linked to your Zip account.  

So how does Zip work exactly? It’s pretty simple. First, you download the app to your phone or the Chrome extension to your computer. The app is available in the App Store and Google Play.

There are three ways to use Zip:

  • Through the app (shopping on your phone) 
  • In stores (you’ll need the app on your phone)
  • Through the Chrome extension (shopping on your computer)

You’ll need to create an account and set up your username, password.

Then, you look for a retailer and do your online shopping. Once you’ve loaded up your shopping cart, you confirm the purchase amount and complete the payment. Your payment is divvied up into four payments over six weeks, and that’s it!

If you want to use Zip in-store, you’ll need to add your Zip card to your digital wallet. Then, click on the “In-Store” tab on the app. Next, you punch in your total purchase amount and review your payment plan. Then, you choose your Zip card as your mode of payment (which is added and can be stored on your digital wallet). Last, just tap to pay.

So how does Zip make money? While you won’t be paying interest fees, like with a credit card or loan, you do pay a fee. Currently, Zip charges $1 for each payment, which adds up to $4 per purchase. If you’re late, you might get hit with an initial late fee that’s either $5, $7, or $10. The amount depends on the state you live in. Thankfully, Zip offers flexibility in its payments.

What Stores Accept Zip?

There are literally thousands of brands and retailers that accept Zip. As mentioned, Zip works with more than 51,000 retailers. And you can shop for everything from clothing, beauty and health, clothing, to food and beverage, travel and pets. There are also Black-owned businesses and smaller retailers. 

Toss a stone in any direction with online shopping, and there’s a good chance the store will accept Zip. Popular retailers include:  

  • eBay
  • Amazon
  • Macy’s
  • Walmart
  • Target
  • Newegg
  • Shein
  • GameStop
  • Zara 
  • Best Buy 
  • Apple 
  • Poshmark

Does Zip Affect my Credit?

When you sign up for a Zip account, there’s no hard credit check, which means signing up for a Zip account won’t ding your credit. So you won’t have to worry about your credit being negatively impacted when you open an account.

Zip also won’t report late payments to the credit bureaus. So if you are making on-time payments, it would boost your credit score in any way. If you’re trying to build credit, you might need to take out a credit card or small personal loan, or get added as an authorized user to someone else’s card

Zip vs. AfterPay

Zip and AfterPay are both platforms that offer buy now, pay plans. And both offer the same installment plan: four equal payments spread out over six weeks. Both AfterPay and Zip have a buy in-store feature. While both platforms are available on iOs and Android, Zip also has a Chrome extension so you can shop on your computer.

And while Zip charges you, the shopper, a $1 per payment ($4 total), Afterpay charges fees on the merchant’s end. That means Afterpay is free to you. However, be late on a payment and Afterpay charges a steeper late fee than Zip does — $10 minimum, but no more than 25% of a purchase, or up to $68. As mentioned before, Zip’s late fees are anywhere from $5 to $10.  

Zip Vs. Klarna

While Zip and Klarna both offer buy now, pay later plans that are four payments every other week (spread out over six weeks), Klarna offers a Pay in 30 option. Plus, for big-ticket items, Klarna offers monthly financing, which means you would pay interest. Zip and Klarna enable its users to shop on their phones via their respective apps, and on the computer by installing a Chrome extension. Both offer thousands of merchants you can shop at.

Just like how credit cards charge their merchants payment processing fees, Klarna charges retailers fees. As a shopper you won’t get hit with any fees for its installment plans. However, Zip charges $1 per payment, or $4 total if you’re making four payments over six weeks. However, it can charge customers fees, such as late fees. If you choose the Pay 4 option, the fee caps at $7, and at $35 for the financing option. Zip’s fees start at $5, but can cap out at $10, which is a smidge higher than Klarna’s late fees.

Zip FAQs

Does Zip check my credit?

When you apply for a Zip account, Zip might check your credit to double-check your details and make sure you are able to make repayments. However, the credit check is a soft pull, so your credit score won’t get dinged during the application.

How long does it take to get your item with Zip?

When you use Zip’s buy now, pay now service, each order needs to get approved. So the time it takes to get your item with Zip really depends. First, a retailer needs to decide whether it will be able to deliver your order. It has up to 7 days to decide.  After your order has been accepted by the retailer, it can take up to a week to update and go through. In some cases, it could take up to 13 days. 

Is there a limit to what I can spend on Zip?

Yes, you’ll have a spending limit. When you’re on Zip, the amount will be displayed on the upper right-hand corner of the main page. Let’s say you have a $400 limit, and you buy something that’s $200. So that bumps down your limit to $200.

As you make payments, that limit will creep back up. So if you make a $50 payment, your spending balance will increase from $200 to $250. Zip may adjust your spending balance, and this could hinge on a handful of factors—your payment history, how long you’ve had a Zip account, and the economic climate at large.   

Final Thoughts

Installment plan apps can be a good thing if you’re looking for flexible payment options and are looking for something that doesn’t involve racking up a balance on a credit card or putting something on layaway. However, you’ll want to know the pros and cons and the ins and outs of a buy now, pay nothing platform to make sure it’s a good fit for your financial situation. 

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