Buy Now Pay Later UK Guide: The Pros, Cons and Best Providers in 2025

BNPL in Britain 2025 - what the numbers really mean

Buy Now Pay Later has moved from niche checkout button to mainstream habit. In 2025, surveys indicate 42% of UK adults have used BNPL at least once, up sharply from 36% in 2023, with around 31% using it in the past year and 13% trying it for the first time (1). UK Finance found 1 in 4 adults used BNPL in 2024, nearly doubling from 14% in 2023, with usage highest among 16-34-year-olds and lowest among those aged 65 and over (2). This is not a fringe trend. BNPL accounts for about 6% of UK online purchases and is forecast to approach 12% imminently, transforming checkout conversion and consumer expectations (9).

Why does it resonate? Flexibility and budgeting. A quarter of UK adults now prefer BNPL over credit cards for everyday spending, particularly younger shoppers who split small, frequent purchases (3). Over 8 million people use BNPL for transactions under £50, often for groceries, takeaways and coffee. Almost a quarter use it to cope with rising living costs (4, 7). Short-term instalments feel simpler than revolving credit and, when used well, can help smooth cashflow.

That convenience comes with caveats. Missed payments are common across providers, with research indicating around 34-41% of users have fallen behind at least once, prompting regulators to push for clearer disclosures and affordability checks (10). Experimental research shows that improving the way terms are presented materially boosts understanding and outcomes, a reminder that good design and plain language are not just nice to have but essential safeguards (8).

For retailers and lenders, growth prospects are significant. Analysts project the UK BNPL market to expand at roughly 25.8% per year through the next decade, with online channels leading the charge (5). Demographics matter too. Millennials, Gen Z and women are disproportionately represented among active users, making targeted messaging and responsible onboarding crucial for sustainable growth (6).

Understanding APR is not just about percentages - it is about what you will pay in real pounds and pence. With BNPL, costs vary by provider and product, from fee-free pay-in-three to interest-bearing instalments. The right option depends on your purchase size, pay date, and certainty of repayment. This guide lays out the moving parts, compares leading providers in the UK and clarifies the fine print so you can choose with confidence.

Bottom line: BNPL can be useful for short-term budgeting if you repay on time. The moment repayment becomes uncertain, costs and credit risk rise.

Who should read this

If you are considering splitting a purchase at checkout, comparing Klarna, Clearpay, PayPal Pay in 3, Zilch, Laybuy, Monzo Flex or Revolut Pay Later, or wondering how BNPL might affect your credit file, this guide is for you. It is designed for UK consumers weighing up fee-free instalments against interest-bearing plans, especially those managing tight budgets in a high-cost environment. It is also relevant if you shop online frequently, use BNPL for smaller essentials or want to understand how returns, refunds and disputes work when a third party is involved. Retailers exploring BNPL’s impact on conversion and basket size will also find value in the market context and compliance cues.

The language of BNPL - what to know first

• Pay in 30 days - delay payment for a set period, often without fees if repaid on time.

• Pay in 3 or 4 - split the cost into equal instalments, typically monthly or fortnightly, fee-free if you pay on schedule.

• Interest-bearing instalments - longer plans, usually 6-36 months, may charge interest and sometimes fees.

• Credit check types - soft checks do not affect your credit score; hard checks can appear on your file and may impact score.

• Affordability assessment - a provider’s view of whether repayments fit your income and spending.

• Late fees - fixed charges if you miss a payment; policies vary widely by provider.

• Section 75 - UK protection that can apply to credit card purchases over £100; BNPL may not qualify, depending on structure.

• Continuous payment authority - permission for a provider to take instalments automatically from your card or bank account.

• Refund handling - how returns adjust your repayment plan and when funds are credited back.

• Credit reporting - some BNPL products report to credit reference agencies, which may affect your profile over time.

Your BNPL choices in the UK

1. Klarna - Offers Pay in 30, Pay in 3 and longer financing on eligible baskets. Strong app experience, soft checks for short-term products, interest for longer terms. Widely accepted online.

2. Clearpay - Pay in 4 over six weeks, late fee model, strong presence with fashion and lifestyle retailers. No interest but fees apply for missed payments.

3. PayPal Pay in 3 - Split purchases into three monthly payments with no interest. Simple if you already use PayPal. Limited to eligible transactions and amounts.

4. Monzo Flex - Spread purchases in 3 interest-free instalments or in longer terms with interest. Integrated within Monzo banking app, with clearer budgeting tools and soft to hard checks depending on plan.

5. Zilch - Virtual card model for online and in-store. Combines fee-free and subscription options, with cashback and limits that grow if you repay on time.

6. Laybuy - Pay in 6 weekly instalments, interest-free. Late fees apply. Popular with fashion and footwear.

7. Revolut Pay Later - Credit line for eligible Revolut customers, repay over 3 months interest-free or longer with interest. Budgeting features in-app.

Standout tip: decide based on repayment certainty, not on retailer hype. If payday is in two weeks, a short, fee-free plan can work. If you need six months, compare the APR against a 0% credit card.

What it could cost and what it could deliver

Can you get it - and should you

Eligibility depends on provider and product. Most require you to be 18 or over, a UK resident with a debit card or bank account, and to pass a risk and affordability assessment. Short-term, fee-free instalments often use soft credit checks and internal data like your repayment history. Longer terms and higher limits are more likely to involve hard searches and income checks. Your limit can grow with on-time payments and shrink after missed instalments. Providers may restrict use for certain categories or merchants, and some plans are available only at checkout with participating retailers. As regulators push for clearer disclosures and stronger affordability checks, expect more granular questions about income, rent, and existing credit commitments. If your income is irregular or you are already carrying expensive debt, consider whether delaying the purchase or using lower-cost credit would be safer.

From checkout to cleared balance - the practical steps

1. Choose BNPL at checkout or in your finance app.

2. Review key terms, fees, and payment schedule carefully.

3. Pass identity, risk and affordability checks if required.

4. Select instalment length that matches your payday timing.

5. Authorise a card or bank for automatic repayments.

6. Track due dates and enable reminders in the provider app.

7. If returning, initiate return and monitor adjusted schedule.

8. If struggling, contact provider early to arrange support.

Upsides and downsides at a glance

Read this before you click split

BNPL can be helpful when your income and repayment dates are predictable. Problems arise when plans stack up or when small purchases become a monthly fixed cost. Keep a single view of all instalments alongside rent, utilities and subscriptions, and build a modest buffer so a late delivery or delayed refund does not trigger a missed payment. If a retailer is slow to process a return, you may still owe the next instalment before the refund arrives. Where APR applies, compare it line by line with a 0% purchase credit card. Remember that about a quarter to a third of users cite inflation and budgeting as motives, but missed payments are not rare and regulators are watching closely for clarity and affordability (4, 7, 10). If repayment certainty is not high, consider alternatives.

If BNPL is not quite right

1. 0% purchase credit card - promotional periods with Section 75 protection on eligible purchases.

2. Existing overdraft - short-term cover, but check EAR and fees carefully.

3. Personal loan - fixed term and rate for larger purchases.

4. Retail finance via a broker - options across multiple lenders to find fit.

5. Save and delay - wait one pay cycle and pay in full.

6. Budgeting tools - bank app pots or envelopes to ringfence spend.

Questions people ask most

Q: Does BNPL affect my credit score? A: Short-term plans often use soft checks that do not show on your file. Longer terms can involve hard searches. Missed payments may be reported and can affect your profile.

Q: Are there fees or interest? A: Many pay-in-3 or pay-in-4 plans are fee-free if you pay on time. Longer instalments may charge interest. Late fees vary by provider, so read the schedule.

Q: What happens if I return an item? A: Your plan is adjusted when the retailer confirms the return. You may still owe an instalment before the refund lands, so track timelines and keep funds aside.

Q: Is BNPL protected like a credit card under Section 75? A: Often not, because BNPL may not be a direct credit card purchase. Some providers offer buyer protections, but they are not identical to Section 75.

Q: Why is BNPL so popular now? A: Adoption has surged with online shopping and budgeting needs. Around 42% have tried BNPL, with younger demographics leading usage and online channels growing fastest (1, 2, 5, 6, 9).

Q: Is regulation changing? A: Yes. Expect clearer disclosures, stronger affordability checks and closer oversight as missed payment rates and market size draw regulatory attention (8, 10).

Where to go from here

Match the plan to the purchase and your pay date. Compare fee-free instalments with 0% credit cards for anything longer. Read the key terms in full, set reminders and keep one dashboard of all commitments. If you need structured finance for bigger-ticket items, consider regulated credit via reputable providers and compare APR, fees and protections before you commit.

Important information

This guide is for general information only and is not personalised financial advice. BNPL and credit products are subject to status, terms and availability. Always check costs, protections and your ability to repay before proceeding. If you are struggling with debt, seek free impartial help.