Buy Now Pay Later at the UK checkout: worth it or not?

Buy Now Pay Later went from a novelty to a checkout expectation faster than almost any payment method before it. 42% of UK adults have now used one, up from around a quarter not long before. Half of UK consumer card spending is online. And 60% of UK customers say they expect instant checkout options.

So the question small retailers keep asking is a fair one: do we need it, and what does it actually cost us?

The case for

It lifts average order value, and often conversion. Global Payments found 51% of retail businesses said BNPL boosted revenue by at least 25%. Take that number with the appropriate caution — it is self-reported by retailers who chose to adopt it — but the direction is consistent across the market.

It removes a specific objection at a specific moment. Someone who wants a £180 item and has an awkward fortnight before payday either abandons the basket or splits the payment. BNPL converts a portion of that group.

You get paid up front. The provider carries the credit risk and pays you in full. That is the part people misunderstand: your cash flow does not stretch, theirs does.

It is becoming an expectation in some categories. Fashion, furniture, electronics, anything with a considered price. In these, its absence is noticed.

The case against

The fee is materially higher than card processing. BNPL typically costs several times what a card transaction does. On thin margins that is the whole decision — if you make 12% and the fee is 5%, you have given away nearly half your margin on those orders.

It may not be creating demand, just moving it. If a customer was going to buy anyway and simply chose the more expensive payment route, you paid extra for the same sale. Nobody's marketing material models this, and it is the single most important number to actually measure.

Returns get more complicated. Refunds route through the provider, they take longer, and customers blame you for the delay.

There is a customer-base question. If you sell to people for whom a £40 order is a considered purchase, offering credit on it deserves a moment's thought about whether you want that association.

Regulation is arriving

New UK BNPL regulation is expected from 2026, bringing the sector properly under consumer credit rules. For merchants this mostly lands as provider-side change — affordability checks, clearer disclosure, complaint routes — rather than as an obligation on you.

The practical effect worth planning for is that approval rates may tighten. If a meaningful share of your revenue depends on customers being approved for credit, that is a concentration risk. It is not a reason to avoid BNPL. It is a reason not to build your pricing around it.

How to decide, with your own numbers

Do this before signing anything:

1. Work out your true margin per order. Not gross — after cost of goods, shipping, packaging, returns and current payment fees.
2. Get the actual fee. Percentage plus fixed component. Model it on your real average order value, not a round number.
3. Estimate what proportion would switch. If 20% of existing orders move to BNPL and none are new, you have simply raised your cost of sale on a fifth of revenue. Is the incremental volume plausibly bigger than that?
4. Run it for one quarter and measure properly. Compare average order value, conversion and total margin — not just “did people use it”. People will use it. That is not the question.

If you cannot show a margin improvement after a quarter, remove it. That is a completely reasonable outcome and a cheap experiment.

What we would usually say

For considered purchases above roughly £100 with healthy margins: probably worth testing. For low-value, high-frequency, thin-margin goods: usually not, and digital wallets will do more for your conversion rate for a fraction of the cost.

Digital wallets are the genuinely under-rated move here. They are on track to overtake debit cards as the dominant online payment method, they cost roughly what a card does, and they remove more checkout friction than anything else you can add in an afternoon.

And whatever you offer, none of it rescues a checkout that is slow or confusing. Abandoned cart recovery covers the fixes that recover the most revenue, and most of them cost nothing. If you sell into markets that do not pay by card at all, designing for Cash on Delivery is a different problem worth reading.

If you are weighing this up for a specific store, book a free call — bring your margin and your average order value and we will work through it with you. See also what we build for retailers.