A practical starting point for offering customer finance
Offering finance can help an online store turn interest into completed sales, especially when customers are weighing up higher-value purchases or want more flexibility at checkout. For many UK businesses, the appeal is straightforward: spreading the cost can improve conversion rates, lift average order values and make premium products feel more accessible.
That said, finance is not just a sales tool. It is a regulated area that affects customer outcomes, complaints risk and brand trust. From 15 July 2026, buy now pay later, or BNPL, will fall under formal FCA regulation in the UK. Providers will need FCA authorisation, clearer pre-contract information, affordability checks and fair support for customers who struggle to repay. Customers will also gain access to the Financial Ombudsman Service, and Section 75 protections will apply to qualifying purchases between £100 and £30,000.
Finance can support growth, but only when the customer understands the commitment and the retailer understands the responsibility.
For online stores, this means the decision is no longer simply whether to add BNPL. It is whether your finance offering is suitable for your product range, customer base and risk appetite. In practice, the strongest approach is usually balanced: clear presentation, compliant provider selection and a range of options that fit different basket sizes rather than relying on one payment method alone.
The businesses most likely to benefit
This is most relevant for UK online retailers that sell products where customers may hesitate because of upfront cost. That often includes furniture, home improvement, electronics, premium fashion, fitness equipment and other mid to high-value items. It is also useful for Shopify merchants and growing ecommerce brands that want to improve checkout completion without relying purely on discounts.
It can suit both established retailers and smaller businesses, but it is especially valuable for firms that want to increase average order value while protecting customer trust. If your customers regularly compare payment flexibility before buying, or if your products naturally lend themselves to instalments, a properly chosen finance option may be worth exploring.
What offering finance really means in practice
In simple terms, offering finance means giving customers a regulated way to spread the cost of a purchase instead of paying the full amount upfront. That may include short-term BNPL, interest-free instalments, longer-term fixed monthly credit or interest-bearing finance for larger purchases.
BNPL is often the most visible option because it can be quick to use and familiar to shoppers. Common formats include paying in three instalments, paying after 30 days or choosing monthly financing. Providers such as Klarna have become popular with UK Shopify stores because they offer several repayment models, fast real-time approval and relatively smooth checkout journeys. Shop Pay Installments can also appeal to merchants that want a simple ecommerce-native setup.
For bigger-ticket items, BNPL is not always the best fit on its own. Interest-free credit has historically played a stronger role for larger retail purchases such as furniture and home goods, because customers often need more time than short deferral products provide. Providers such as DivideBuy specialise in 12-month options in the UK, while longer-term lenders such as Affirm are aimed more at higher-value baskets and extended repayment terms.
The key point is that finance is not one product. It is a group of payment options, each designed for different customer needs, spending levels and risk profiles.
How to build a finance offer that works well
The practical process starts with understanding your sales pattern. Look at your average order value, the products customers abandon most often and the price points where hesitation increases. If most purchases are relatively small, a short-term instalment product may be enough. If you sell expensive items, a broader mix of finance options is usually more effective.
Next, assess providers on more than headline fees. In the UK from July 2026, BNPL providers will need FCA authorisation and will be expected to carry out affordability checks on each transaction. They must also provide clear information before the customer commits and direct struggling customers towards appropriate support. That means retailers should examine integration quality, customer messaging, complaints handling, decline management and regulatory readiness, not just conversion claims.
A sensible rollout often includes a pilot on selected products, careful tracking of approval rates and a review of any increase in returns, disputes or service queries. Customer communication matters as much as the finance product itself. Pricing pages, product pages and checkout messaging should explain that finance is subject to status, that terms apply and that customers should only borrow if repayments are affordable.
The smoothest checkout is not always the safest one. Good finance journeys balance speed with clarity.
Where possible, match the offer to the purchase. Short-term BNPL suits quick deferrals. Longer plans suit larger, considered purchases.
Why regulation and product choice matter now
For UK online stores, the timing matters because the regulatory landscape is changing in a way that affects both risk and opportunity. From 15 July 2026, BNPL regulation will bring these products much closer to the standards customers already expect from other forms of consumer credit. Providers will need to be FCA authorised. Affordability checks will become part of the transaction journey. Consumer Duty expectations around fair treatment and good outcomes will apply. Customers will also gain access to the Financial Ombudsman Service.
This raises the bar, but it can also strengthen trust. If a customer knows the finance option includes clearer explanations, stronger protections and routes for redress, they may feel more confident completing a purchase. Section 75 protection is particularly significant. For new qualifying BNPL agreements on purchases between £100 and £30,000, there will be joint liability between the provider and retailer if something goes wrong. That can support confidence on larger purchases where reassurance matters.
From a commercial perspective, offering only one finance route can leave gaps. UK retailers often perform better when they combine BNPL with interest-free or interest-bearing credit. Short-term products can help with impulse and convenience. Longer-term finance can unlock more expensive sales by giving customers manageable monthly repayments. In other words, the right blend can serve more customer journeys without forcing one payment model onto everyone.
Benefits and drawbacks at a glance
| Area | Potential benefits | Possible drawbacks |
|---|---|---|
| Conversion | Can reduce checkout friction and improve completion rates | Poorly explained terms can increase abandonment or complaints |
| Average order value | Customers may feel able to buy higher-value items | Higher basket sizes can mean greater exposure to returns and disputes |
| Customer choice | Different finance options can suit different budgets | Too many options can overwhelm customers if presented badly |
| Trust | FCA-regulated products and Section 75 protections can improve confidence | Trust can fall quickly if the provider experience feels unclear or unfair |
| Compliance | Strong providers can support compliant customer journeys | Retailers still need oversight of wording, placement and fair presentation |
| Cash flow | Merchant receives funds upfront from many providers, less customer payment delay | Provider fees can reduce margin |
| Risk management | Affordability checks may reduce unsustainable lending and defaults | More checks can lower approval rates for some customers |
| Brand reputation | Responsible finance can reinforce a trustworthy image | Aggressive finance messaging can damage reputation |
| High-value sales | Interest-free and longer-term credit can unlock premium purchases | Longer-term borrowing increases the importance of clear explanations |
| Platform integration | Options like Klarna, Shop Pay and specialist providers can integrate efficiently | Integration quality varies, and technical issues can harm checkout performance |
Key risks and warning signs to watch carefully
The biggest mistake is treating finance as a plug-in rather than a regulated customer journey. Even where the lender takes the formal credit decision, your store still influences how the option is presented. If finance is shown more prominently than the total cash price, if terms are hidden, or if the messaging encourages customers to borrow without understanding the commitment, complaints and scrutiny can follow.
Watch for gaps between the provider promise and the real customer experience. A slick approval journey means little if declined customers are confused, if refunds take too long or if post-sale service creates friction. You should also look carefully at fee structures, settlement timing, dispute handling and how the provider supports vulnerable customers or those in financial difficulty.
From July 2026, BNPL providers must conduct affordability checks and support struggling customers with debt advice referrals where appropriate. That should reduce some risk, but it may also change acceptance rates and customer expectations. Retailers should prepare for customers asking why a finance application was declined or why more information is needed.
Another point to monitor is product fit. A short-term BNPL product may be fine for fashion or lower-value purchases, but it can be less suitable for larger purchases where customers need longer repayment periods. Choosing the wrong finance model can hurt both conversion and customer outcomes. Good governance means reviewing data regularly, not setting and forgetting.
Other routes worth considering
- Interest-free credit - Often well suited to larger purchases such as furniture, home improvement and electronics. It can support higher average order values where short-term BNPL is too limited.
- Interest-bearing instalment finance - Useful when customers want lower monthly payments over a longer period and are comfortable paying interest in return for flexibility.
- Deferred payment options - Can work where customers need a short breathing space before paying, but clear terms are essential.
- Traditional card payments - Still suitable for many customers who prefer to manage repayment through their own card provider rather than merchant-offered finance.
- Deposit plus staged payments - Helpful for made-to-order or higher-ticket products where the customer can commit in phases.
- Manual invoicing or trade credit for B2B buyers - Relevant if your online store also serves business customers and needs a separate payment journey from consumer finance.
- A blended approach - Often the most effective option, combining BNPL for smaller baskets with longer-term credit for premium purchases.
Common questions from UK online retailers
That depends on your role and the arrangement. In many cases, the lender or finance provider is the authorised firm, but retailers may still need to comply with financial promotion rules, introducer permissions or other requirements. You should take regulated advice if you are unsure.
What changes for BNPL in July 2026?
From 15 July 2026, BNPL providers in the UK will need FCA authorisation. They must provide clearer pre-contract information, carry out affordability checks and meet standards linked to Consumer Duty and fair treatment.
Will Section 75 apply to BNPL?
Yes, for qualifying new BNPL agreements from July 2026, Section 75 protections will apply to purchases between £100 and £30,000. This creates joint liability between the provider and retailer if there is a valid issue.
Is BNPL enough on its own?
Often not. BNPL can be effective for short-term flexibility, but many UK retailers see better results by combining it with interest-free or longer-term credit, especially for higher-value products.
Which providers are commonly considered by UK ecommerce brands?
Klarna is widely used by Shopify merchants and offers several repayment formats. DivideBuy is known for UK-focused retail finance, particularly around 12-month plans. Affirm is associated with longer-term financing for higher-value purchases, although availability and fit should be checked carefully for your market.
How should finance be shown on product pages?
Present it clearly and fairly. Show the full cash price, key repayment terms, eligibility points and any important limitations. Customers should understand what they are agreeing to before they reach checkout.
Can offering finance improve conversion?
It can, especially where price is the main barrier to purchase. But results depend on product fit, provider quality, fees, approval rates and how clearly the finance option is explained.
How Switcha can support your decision-making
As a UK price comparison website, Switcha can help you approach customer finance with a clearer market view. Rather than relying on one provider's sales message, you can compare options more objectively, looking at fees, features, repayment structures, integration fit and the practical strengths of different providers.
That matters because the right solution depends on your store, your basket sizes and the customers you serve. Some retailers may benefit from a simple BNPL option. Others may need a broader mix that includes interest-free or longer-term credit. By comparing what is available side by side, you can make a more informed decision and build a finance offer that supports growth without losing sight of compliance and customer trust.
Important information to keep in mind
This guide is for general information only and does not constitute legal, regulatory or financial advice. Rules on consumer credit, financial promotions and retailer permissions can be complex and depend on your business model, provider relationship and customer journey. Before launching any finance option, consider taking advice from a qualified compliance professional or solicitor and confirm the latest FCA requirements directly. Customers should only be offered credit in a clear, fair and responsible way.
