Buy Now, Pay Later (BNPL) has become commonplace on UK shopping sites and high streets.
It is a financial service where the provider lets people spread the cost of purchases with no interest, if they repay on time.
At checkout, customers can choose ‘buy now, pay later’, the provider pays the retailer in full, and customers repay the BNPL firm according to an agreed schedule (typically less than 12 months, and mostly three monthly payments or “Pay in 30 Days” for the full amount). (GOV.UK)
Historically, ‘buy now, pay later’ services utilized an exemption in the Consumer Credit Act 1974 for interest-free loans with fewer than 12 instalments (Harper James).
BNPL products now fall under “Deferred Payment Credit” (DPC) in regulatory terminology.
Unlike traditional credit cards, BNPL applications usually involve a “soft” credit check, which allows for instant approval at checkout without impacting the applicant’s credit score. (Lloyds Bank Academy)
Also read: Top 6 Buy Now Pay Later Apps In The UK | UK News Blog
The Size of the UK BNPL Market
The UK is now a ‘buy now, pay later’ hotspot.
The UK BNPL market is expected to grow by 12.2% to reach a value of $38.47 billion (£27.8 billion). (Businesswire)
BNPL usage has exploded across demographics; by late 2024, 25% of UK adults had used BNPL at least once, compared to just 14% the previous year. (UK Finance)
While younger cohorts remain the most frequent users, the fastest growth is now seen among “silver spenders” as uptake among those aged 55 to 64 more than doubled in a single year, rising from 10% in 2023 to 21% in 2024. (The Guardian)
The average ‘buy now, pay later’ purchase amount stands at £114, with fashion (including clothing, shoes, and jewellery) accounting for approximately 46% of all BNPL spending. (UK Finance)
Major Buy Now, Pay Later Providers in the UK
- Klarna leads the UK market, partnering with more than 60,000 retailers and offering popular “Pay in 3” and “Pay in 30 Days” options.
- Clearpay, owned by Australia’s Afterpay, is another big player, especially in fashion and beauty. PayPal leverages its huge existing customer base for “Pay in 3”, while Laybuy and Humm target specialist niches.
- A homegrown competitor, Zilch, stands out with its “no late fees” policy and ad-subsidised model: retailers pay to be featured and fund the 0% credit for users.
- Banks are getting involved, too. HSBC offers “Flexipay”, and digital banks like Monzo let customers split payments through their cards or via Apple Pay’s new “Pay Later” feature.
The Risks and Criticisms of Buy Now, Pay Later
BNPL has faced scrutiny regarding its potential to lead consumers into debt spirals.
BNPL is advertised as a budgeting tool. Nearly half of UK users say it helps manage their cash flow each month. (Imperial Business School)
However, not everyone realises BNPL is a credit agreement, and many are unaware of potential fees.
Research from StepChange Debt Charity found that BNPL users are twice as likely as other credit users to borrow money specifically to cover essential household bills. (StepChange)
This points towards a correlation between BNPL-fuelled spending and debt accumulation among UK households.
Citizens Advice reported a 45% increase in people seeking debt help between 2021 and 2025, with average household debt for those in a “negative budget” reaching nearly £10,000. (Citizens Advice)
A significant risk involves “debt stacking,” where nearly one-third of users have borrowed money from other sources to repay their existing BNPL instalments. (GrantThornton)
How BNPL Is Regulated in the UK (2026 Update)
After years of consultation, the “wild west” era of unregulated BNPL is coming to a close.
The UK government and the FCA have confirmed that full regulation will commence on 15 July 2026, known as “Regulation Day”. (Skadden)
Under the new rules:
- Lenders must conduct proportionate creditworthiness assessments for every transaction, including those under £50. (SplitIt)
- Key product information, such as repayment schedules and the consequences of missed payments, must be immediately visible to shoppers during checkout without requiring them to click external links. (Addleshaw Goddard)
- Borrowers will gain the right to escalate complaints to the Financial Ombudsman Service (FOS) and benefit from Section 75 protection for purchases over £100. (Veriff)
- A Temporary Permissions Regime (TPR) will allow existing firms to continue operating while their full authorization applications are reviewed throughout 2026. (Financial Conduct Authority)
As competition grows and the sector faces more scrutiny, experts predict a shakeout in the UK ‘buy now, pay later’ market. Consumer confidence remains strong, but educators and regulators are warning that financial literacy must improve to keep people safe.
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Disclaimer: All information provided was correct at the time of publication (January 2026) and was collected with the help of accredited tools and real-world data insights.
