Everything you need to know about offering finance to your customers

Why finance at checkout is back in focus

UK consumers are using credit more selectively, but they are still using it. New consumer finance business grew 8% year-on-year in September 2025 and is on course for roughly 7% growth for the year, reflecting improving confidence as inflation eases and Bank Rate cuts edge closer. At the same time, net consumer credit borrowing remains choppy month to month, with £1.5 billion in September after £1.7 billion in August. That mix of growth and caution tells a simple story for retailers and service providers: flexible, transparent finance can unlock sales, but only if it is priced fairly and explained clearly.

High household credit balances add a further responsibility. Outstanding consumer credit reached about £235.9 billion by March 2025, including £73.2 billion on credit cards. Average card balances per household remain material. Consumers want help spreading essential costs, but they also want to avoid debt traps. The FCA’s Consumer Duty has raised the bar on clarity and fair value, and firms that meet the standard are seeing greater trust.

The right finance offer reduces friction at checkout and protects customers from undue harm.

Card payments and digital journeys continue to dominate. Cash machine use is falling, and digital-first credit options - including card-linked instalments and online retail finance - align with how UK consumers prefer to pay. For merchants, that means integrating finance within the digital basket, not bolting it on after the sale.

A strong finance proposition does three things:

• Improves affordability with realistic instalments and clear total cost of credit
• Meets FCA requirements on suitability, disclosure and fair value
• Integrates with digital payments for a seamless, low-friction experience

The competitive landscape is also shifting. Innovation in lending and embedded finance is accelerating, with the UK financial services market projected to expand rapidly through 2029. Expect more providers, sharper pricing in some segments, and more scrutiny of outcomes. Your edge is good data, thoughtful product design and plain-English communication.

Who benefits from this guide

This guide is for UK retailers and service providers considering point-of-sale finance or embedded credit for consumer purchases. It suits e-commerce brands, high street shops, home improvement firms, healthcare and dental practices, automotive services and membership-based businesses. It also helps finance leads and compliance managers who must translate FCA expectations into everyday journeys and scripts.

Consumers can use it to understand the differences between credit options, how costs are shown, and what questions to ask before agreeing to finance.

Core ideas to get right

• APR vs total cost: APR compares products, but customers decide based on pounds and pence. Always show total repayable and instalment amounts.
• Fixed vs variable: Most retail finance uses fixed instalments. Credit cards often have variable interest and flexible repayments.
• Soft and hard checks: Pre-qualification with soft searches protects credit files until the customer proceeds.
• Affordability vs eligibility: Eligibility is can they get approved. Affordability is can they repay without hardship - both matter under the Consumer Duty.
• Promotional pricing: 0% or low-rate offers can be effective, but ensure fair value to customers and sustainable merchant fees for you.
• Digital-first journeys: Customers expect card-linked, wallet-friendly, mobile checkout with clear disclosures before consent.

The main ways to offer finance

Use the route that matches your basket sizes, margins and customer profile. The table below compares common options.

Standout choice: For regulated, higher-ticket items - think home improvements or healthcare - retail finance with a lender partner plus compliant disclosures typically offers the best mix of approval rates and affordability.

Pricing, impact and what it means for margins

• Conversion lift: Transparent 0% or low-rate instalments can increase conversion and average order value among budget-conscious shoppers, especially as confidence rebuilds.
• Merchant economics: 0% APR usually requires a subsidy. Model the fee against expected uplift in conversion and reduced basket abandonment.
• Customer affordability: Interest rates on personal loans, credit cards and overdrafts have risen slightly in 2025. Balance promotional offers with clear explanations of total cost and what happens if payments are missed.
• Risk control: Expect moderate monthly fluctuations in consumer credit demand. Use cautious credit limits, robust affordability checks and clear hardship paths.

Price the offer to be sustainable in a higher-rate world - then explain it in plain English.

Who is likely to be approved

Eligibility varies by lender and product, but typical criteria include:

• UK residency and age 18+
• Stable income or benefits evidence
• Credit history consistent with requested limit and term
• Debt-to-income and existing commitments within prudent thresholds
• For 0% promotions, stronger credit tiers may be required

From a Consumer Duty perspective, the question is not only can we approve but should we. That means tailoring limits, using soft checks for pre-qualification, and signposting support for customers who might be at risk of financial difficulty.

From browse to approval - a simple path

1. Present instalment choices with total repayable upfront.
2. Pre-qualify with a soft search and affordability check.
3. Capture essential details with consent and disclosures.
4. Provide instant decision with clear next steps.
5. Execute agreement and confirm payment schedule.
6. Fulfil order and issue legally required documents.
7. Offer account access, reminders and support options.

What to weigh up

Pros:

• Higher conversion and larger average order values
• Better budgeting for customers via predictable payments
• Competitive advantage with digital-first journeys

Cons:

• Merchant subsidies for 0% APR can erode margin
• Operational complexity and compliance obligations
• Reputational risk if communications are unclear

Tip: Pilot with a subset of products and measure conversion, returns and delinquency before scaling.

Red flags and how to avoid them

• Opaque pricing: Always show instalment, fees and total repayable side by side.
• Misleading promotions: Set clear criteria and avoid small print surprises.
• Overextension risk: Use real-time affordability checks, not just credit scores.
• Poor aftercare: Provide reminders, self-serve changes and hardship routes.
• Weak data controls: Secure customer data and limit access by role.

Small improvements - clearer language, better timing of disclosures, softer tone in collections - can materially improve outcomes and trust.

If finance is not the best fit

• Layaway or reservation plans - pay over time before delivery
• Discounts for debit card or bank transfer payments
• Subscriptions or memberships that spread service costs
• Third-party savings or budgeting tools integrated at checkout

For low-margin items or highly seasonal demand, these can reduce complexity while still smoothing cash flow for customers.

Frequently asked questions

Q: Do I need FCA authorisation to offer finance? A: Many credit activities are regulated. If you broker, lend or exercise rights under a regulated agreement, you likely need authorisation or an exemption. Work with an authorised lender or seek legal advice.

Q: How will rising interest rates affect take-up? A: Rates on credit cards and personal loans have edged up in 2025, which can dampen demand. Clear 0% or low-rate instalments, if sustainable, can offset rate sensitivity.

Q: Is credit card borrowing still growing? A: Yes. Annual growth in consumer credit has risen modestly, with credit card balances growing faster than other forms. Expect selective usage and more demand for instalments.

Q: What data should I track to prove Consumer Duty outcomes? A: Monitor approval rates, arrears, early repayments, complaints, customer understanding metrics, and vulnerability outcomes. Evidence that customers receive fair value and avoid foreseeable harm.

Q: How do digital payment trends influence my setup? A: With card and digital payments rising, embed finance where customers already pay - your checkout, wallets and apps - with instant decisions and clear on-screen summaries.

Q: What basket sizes suit point-of-sale finance? A: Typically £150 to £10,000 depending on product, lender appetite and risk. Larger values may move to personal loans with longer terms.

Ready to put this into practice

• Start with one product category and a single lender integration
• Choose two instalment plans - one 0% short term, one low-rate longer term
• Test disclosures, success metrics and customer comprehension before rollout

Clarity sells. Simplicity converts. Compliance protects.

Source: Everything you need to know about offering finance to customers

Important information

This guide provides general information for UK businesses and is not legal, tax or regulatory advice. Finance is subject to status and affordability. Always obtain professional advice and ensure compliance with FCA rules and the Consumer Duty.