Best Ways to Offer Finance to Your Customers in 2025

Making Finance Work for Your Customers

In 2025, flexible finance solutions are more than a value-add—they’re often a necessity for UK retailers looking to stay competitive. Providing finance at the point of sale can boost conversions, increase average order value, and enhance customer loyalty. But with evolving regulations and new products emerging, it’s crucial to navigate your options with clarity and confidence.

Who Should Consider Offering Customer Finance?

This guide is for UK-based retailers, service providers, and e-commerce businesses considering finance solutions for their customers. Whether you’re a small boutique owner or a large online retailer, understanding the best ways to offer finance in 2025 can help you meet customer expectations and drive growth.

Key Concepts: Finance Basics and Terminology

Before you dive in, it’s important to understand the terminology. Here are some essentials:

• Retail Finance: An arrangement where customers can pay for goods or services over time, typically via loans, credit, or instalment plans.

• Point-of-Sale (POS) Finance: Finance offered at the point of purchase, often integrated into your checkout process.

• Buy Now, Pay Later (BNPL): Short-term, interest-free instalment plans popular with online shoppers.

• APR (Annual Percentage Rate): The yearly cost of borrowing, including fees and interest.

• Credit Broker: An intermediary (such as Kandoo) that connects customers with suitable finance products from lenders.

Understanding these terms is the first step in choosing the right solution for your business and ensuring your customers are well-informed.

Exploring Finance Options for 2025

Your choice of finance options can shape your customer experience and impact your bottom line. The main types available for UK retailers include:

1. Buy Now, Pay Later (BNPL)

   • Popular with younger consumers

   • Often interest-free if paid on time

   • Providers: Klarna, Clearpay, PayPal Pay in 3

2. Traditional Retail Loans

   • Longer repayment terms, larger amounts

   • Fixed or variable APR

   • Offered by specialist lenders via brokers

3. Interest-Free Credit

   • No interest charged if paid within the agreed term

   • Often used for big-ticket items (e.g. furniture, electronics)

4. Revolving Credit Facilities

   • Similar to a credit card

   • Customers can borrow and repay flexibly

5. Deferred Payment Plans

   • Payments begin after a set period (e.g., 3 or 6 months)

Each option has its pros and cons, depending on your typical transaction size, customer demographics, and business model.

Costs, Risks, and Business Impact

Offering finance can lead to higher sales and customer satisfaction, but it’s not without cost or risk. Key considerations include:

• Merchant Fees: Providers usually charge a fee per transaction, sometimes a percentage of the sale or a flat rate.

• Bad Debt Risk: Some providers absorb customer default risk, others may pass on some liability.

• Regulatory Compliance: The FCA oversees consumer credit in the UK. Non-compliance can result in fines or loss of permissions.

• Impact on Cash Flow: With most finance partners, you’re paid upfront, but it’s essential to check terms.

A clear understanding of the cost structure and potential risks is vital before you commit.

Eligibility and Requirements

To offer finance, UK businesses typically need to:

• Be FCA-authorised or work with an authorised broker

• Meet minimum turnover or trading history requirements (often 12+ months)

• Integrate finance solutions into their sales process (in-store and/or online)

• Train staff on compliance and customer communication

• Pass credit and anti-fraud checks by finance partners

Requirements can vary based on provider and product type. Always review terms carefully.

Step-by-Step: How to Offer Customer Finance

1. Assess customer demand and business needs

2. Research and compare finance providers

3. Check FCA authorisation status or partner with a broker

4. Apply and complete due diligence with your chosen provider

5. Integrate finance into your POS or website

6. Train staff or update customer service scripts

7. Promote finance options to customers

8. Monitor uptake, compliance, and customer feedback

Pros and Cons to Consider

Pros:

• Increased sales and conversion rates

• Larger average order values

• Improved customer satisfaction and loyalty

• Immediate payment for your business (in most cases)

Cons:

• Provider fees reduce margin

• Compliance adds operational complexity

• Potential for customer misunderstanding or complaints

• Not all customers will be eligible for finance

Balancing these factors ensures finance enhances, rather than complicates, your offering.

Key Considerations Before Deciding

Take a measured approach:

• Evaluate your customer base: Are they likely to use finance?

• Understand your responsibilities under FCA rules

• Consider the impact on your brand reputation

• Ensure you have robust processes for handling complaints

• Review how finance will integrate with your sales and support systems

A thorough assessment can prevent costly missteps.

Alternatives to Traditional Customer Finance

If you’re not ready to offer formal finance, consider:

• Layaway Schemes: Customers pay in instalments before receiving goods

• Discounts for Upfront Payment: Encourage full payment at point of sale

• Third-Party Credit Cards: Promote existing credit options without direct involvement

• Gift Cards and Vouchers: Flexible payment solutions without credit risk

These alternatives can offer flexibility with fewer regulatory burdens.

Frequently Asked Questions

1. Is offering finance regulated?
Yes. The FCA regulates most consumer credit activities. You either need to be authorised or work with an authorised broker.

2. Does my business get paid upfront?
Typically, yes. Most providers pay you upfront and collect repayments from your customer.

3. What happens if a customer misses payments?
Finance providers usually handle collections and bear the risk, but check your agreement.

4. Can I offer finance online and in-store?
Yes. Most solutions can be integrated both digitally and at physical locations.

5. Will all my customers be eligible?
No. Eligibility is based on provider criteria, including credit checks.

6. How do I promote finance responsibly?
Ensure all advertising and customer communication is FCA-compliant, clear, and fair.

7. What if I change provider?
You’ll need to update integrations, train staff, and possibly notify the FCA.

Taking the Next Step

Ready to explore customer finance for your business? Start by mapping your customer journey and speaking to a reputable broker, like Kandoo, who can help you navigate provider options and compliance. Test solutions with a pilot phase to ensure they work for you and your customers.

Disclaimer

This article provides general information only and does not constitute financial or legal advice. Always consult a qualified professional and review FCA requirements before making decisions about offering finance to customers.