PayPal is set to introduce an annual fee of £12 for users whose accounts have been inactive for a year or more.

From 16 December 2020, PayPal users will be charged the fee if their accounts have been inactive for at least 12 consecutive months.

PayPal’s definition of “inactive” is an account where the user hasn’t sent, received or withdrawn money, or logged into their account.

If your account has been inactive for over 12 months, the fee you’re charged will be the lesser of £12 or your entire PayPal balance. If you don’t have any money in your PayPal account, or your balance is negative, PayPal says you won’t be charged a fee even if you have a credit or debit card linked to the account.

To avoid being charged, account holders need to log into their PayPal account even if they do not carry out any transaction on or before 15 December 2020 as the fee introduction kicks in on 16 December 2020.

PayPal is also adding a new tool that allows shoppers to pay for goods in interest-free instalments to support struggling consumers and online retailers on its payments platform.

The company said “Pay in 3” would be available for purchases between £45 and £2,000 from the end of the month.

Under the scheme, PayPal covers the full cost of the goods for the retailer or business at point of sale, and automatically takes the payment instalments on their due date.

It said there were no charges for either the retailer or customer, though a missed payment would result in a flat £12 fee.