This was reported as fixed in either 4.7.8 or 4.7.9, but has not worked for me on a Joomla site since 4.7.10 at least. I've had to revert to creating two separate menu items for membership, one with Pay Later, and one with credit card processing in order to provide a method of payment for those who do not wish to use PayPal or any online payment system.
Now that its time for the annual convention, I've had to create two separate events to allow for the same issue.
I reported this back in February on JIRA as CRM-20057, but nothing has been done and evidently there has been no verification of the issue. I can't test this on the Joomla demo site as the Joomla demo is running 4.6.18, and also shows other issues.
So ... IS anyone else having problem with Pay Later ???
AND ... WHY can't someone update the Joomla demo to the latest 4.7 release so we can verify whether its a local issue or not.