What's Happening?
A recent survey conducted by Lloyds Merchant Services highlights a growing consumer preference for bank-backed Buy Now, Pay Later (BNPL) options at checkout. The survey, which included responses from 2,000
UK consumers and 150 businesses, indicates that more than a third of consumers would be more inclined to use installment plans if they were integrated directly with their bank. This preference underscores the importance of trust in the adoption of BNPL services. The data reveals that 61% of current users are more likely to shop with retailers offering BNPL, with this figure rising to 63% for point-of-sale (POS) finance. The survey also notes that BNPL is not limited to small purchases, as half of the adopters are comfortable using it for mid-ticket purchases ranging from £100 to £500.
Why It's Important?
The findings from Lloyds Merchant Services underscore the shifting landscape of consumer finance, where flexible payment options are becoming a significant driver of retail choice and spending. The integration of BNPL services with banks could enhance consumer trust and adoption, potentially leading to increased sales for retailers. The survey also highlights that cash-flow management is a primary motivator for using BNPL, suggesting that these services are becoming integral to everyday financial planning rather than just emergency borrowing. For retailers, offering BNPL and POS finance options can lead to higher average order values and increased customer loyalty, as evidenced by 62% of merchants reporting higher order values and 54% noting boosted repeat business.
What's Next?
The introduction of new BNPL regulations by the Financial Conduct Authority (FCA) in 2026 will bring significant changes to the industry. These regulations will require clearer information and affordability checks, and providers will need to be authorized. Businesses are already preparing for these changes, with 97% considering how the regulations will impact their purchase experience offerings. Lloyds Merchant Services is providing guidance to help merchants navigate these changes responsibly, emphasizing the importance of choosing trusted partners and ensuring transparent communication at checkout.
