Consumers see buy now, pay later (BNPL) as more than just a flexible way to pay, they associate the service with specific providers. In fact, most users report being more likely to shop at retailers that feature their preferred BNPL provider, highlighting how brand reputation and trust are crucial factors influencing consumer choice in the market.
However, overspending concerns have prompted regulatory action in the market. Regulation alone may not fully address consumer worries that BNPL is promoting excessive spending. To build trust, providers will need to focus on introducing budgeting tools and features that support responsible spending. This will demonstrate a genuine commitment to consumer wellbeing.
UK BNPL Market – Future Trends
Although BNPL is available for in-store purchases, it remains primarily an online payment method with most users engaging with it at online checkouts. However, there is significant consumer interest in BNPL cards and most believe that having access to a card would encourage them to use the service more frequently. Expanding card offerings could help providers become a more integral part of consumers’ everyday financial habits and increase their share of overall spending.
What is Buy Now, Pay Later Financing?
Buy now, pay later financing is a payment option that lets consumers buy products or services without paying the total amount upfront. This means a purchase can be paid off in fixed instalments over time. Some BNPL arrangements do not include any interest for a certain period, although late fees can be applied if repayments are missed. Interest charges can also apply to longer-term agreements.
BNPL services, such as Clearpay and Klarna, are popular among consumers and businesses, particularly online retailers, since they offer convenience and flexibility to consumers, while helping businesses increase sales, boost average transaction numbers, as well as attracting new customers.
Other brands offer alternative regulated instalment credit options, such as Monzo Flex, which provide users with added consumer protection.
Key Topics Analysed in the Report
- Market dynamics and the key macroeconomic factors impacting the buy now, pay later market
- Current usage of buy now, pay later, including existing users’ expectations of how this usage will change over the next 12 months
- Key motivations behind using buy now, pay later and the impact these have on marketing strategies
- Spending categories for buy now, pay later, and whether buy now, pay later use is considered for higher-cost purchases
- Barriers to adoption of buy now, pay later, including consumer concerns that it encourages impulsive spending
- Attitudes towards buy now, pay later, including the cost of living’s impact on its appeal and whether a physical or digital BNPL card would lead to more frequent use
Meet the Expert Behind the Analysis
This report is written by Charlie Landsborough. Charlie joined Mintel in January 2023 as a research analyst for financial services. Prior to joining Mintel, he had just graduated and was working as an investment assistant at an impact investment fund. Charlie has an undergraduate degree in Advertising and a masters degree in Investment and Finance.
Buy now, pay later continues to grow in popularity, as consumers seek flexible ways to manage their spending amid ongoing financial pressures.
Charlie Landsborough
Financial Services Analyst
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EXECUTIVE SUMMARY
- Opportunities for the buy now, pay later financing market
- Committing to responsible shopping is key to driving BNPL uptake
- Physical and digital cards present new growth opportunities for providers
- Providers must actively foster loyalty to retain it
- Market dynamics and outlook
- Debit card payments continue to rise
- Appetite for credit remains strong amid economic instability
- Graph 1: monthly changes of net consumer credit lending, 2021-25
- Online shopping remains a major contributor to total retail sales
- Graph 2: internet sales as a percentage of total retail sales, 2018-24
- BNPL emerges as a growing consideration for online shoppers
- Graph 3: factors influencing choice of one online retailer over another, 2025
- Brits continue to place emphasis on discretionary spend
- Graph 4: financial activity in the last three months and planned financial activity in the next three months, 2025
- New regulations on the horizon for buy now, pay later
- What consumers want and why
- BNPL cements its role as a mainstream credit option
- Graph 5: types of credit/ borrowing used in the last two years or currently owe money on, 2025
- Repeat BNPL use intentions highlights continued growth potential
- Graph 6: likelihood of using buy now, pay later in the next 12 months, 2025
- BNPL usage set to rise among existing customers
- Impulsive spending fears hold back greater participation
- Graph 7: barriers to using buy now, pay later, 2025
- Affordability and flexibility drive BNPL usage
- Mid-tier purchases are BNPL’s sweet spot
- Graph 8: price at which consumers would consider using buy now, pay later, 2025
- BNPL usage fuelled by discretionary spending
- Vast majority of users are confident in their understanding of BNPL
- Innovation and marketing
- Klarna continues to expand through strategic partnerships…
- Providers push for in-store presence to expand share of wallet
- Clearpay introduces Spend Cap to enhance customer control
- Zilch launches its biggest campaign to date
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MARKET DYNAMICS
- Payment landscape
- Debit card payments continue to rise
- Online and contactless payments dominate card spending
- Graph 9: debit and credit card value of transactions, 2024-25
- Credit landscape
- Consumer credit lending rises as household financial pressures persist
- Graph 10: gross consumer credit lending (excluding student loans), 2020-25
- Appetite for credit remains strong amid economic instability
- Graph 11: monthly changes of net consumer credit lending, 2021-25
- Elevated credit rates make BNPL an increasingly attractive option
- Graph 12: Bank of England qouted interest rates for personal loans, credit cards, overdrafts, 2021-25
- Online retailing
- Online shopping remains a major contributor to total retail sales
- Graph 13: internet sales as a percentage of total retail sales, 2018-24
- BNPL emerges as a growing consideration for online shoppers
- Graph 14: factors influencing choice of one online retailer over another, 2025
- Macro-economic factors
- Inflation continues to burden consumers’ finances
- Graph 15: CPI inflation rate, 2021-25
- Base rate on a downward path, but borrowing pressures remain
- Consumer confidence is on the rise, but caution persists
- Graph 16: financial confidence index, 2020-25
- Brits continue to place emphasis on discretionary spend
- Graph 17: financial activity in the last three months and planned financial activity in the next three months, 2025
- Regulatory and legislative changes
- New regulations on the horizon for buy now, pay later
- Reforms announced for the Consumer Credit Act
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WHAT CONSUMERS WANT AND WHY
- Use of consumer credit
- BNPL cements its role as a mainstream credit option
- Graph 18: types of credit/ borrowing used in the last two years or currently owe money on, 2025
- Younger adults most likely to be using BNPL
- Graph 19: usage of buy now, pay later in the last two years or currently owe money on, by age, 2025
- BNPL usage rises among the financially vulnerable
- Graph 20: consumers who currently owe money on buy now, pay later, by financial situation, 2025
- Future buy now, pay later purchasing intentions
- Repeat BNPL use intentions highlights continued growth potential
- Graph 21: likelihood of using buy now, pay later in the next 12 months, 2025
- Young Brits will determine extent of BNPL development
- Graph 22: likelihood of using buy now, pay later in the next 12 months, by age, 2025
- BNPL becomes a repeat choice for existing users
- BNPL becoming embedded in existing customers’ payment habits
- Graph 23: expected changes in use of buy now, pay later in the next 12 months, 2025
- Barriers to using buy now, pay later financing
- Impulsive spending fears hold back greater participation
- Graph 24: barriers to using buy now, pay later, 2025
- Providers must demonstrate a commitment to responsible shopping
- Greater transparency will be key to addressing trust concerns
- Fear of weakening financial resilience limits BNPL uptake
- Reasons for using buy now, pay later financing
- Affordability and flexibility are key attractions of BNPL
- Graph 25: reasons for using buy now, pay later, 2025
- User perception of smaller payments helps reframe overall financial commitment
- Interest free credit resonates with older consumers
- Reliance increases among those in tighter financial situations
- Graph 26: use of buy now, pay later to purchase products that would be unaffordable otherwise, by financial situation, 2025
- Price sensitivity for buy now, pay later
- Mid-tier purchases are BNPL’s sweet spot
- Graph 27: price at which consumers would consider using buy now, pay later, 2025
- Interest in BNPL peaks when price introduces friction, but not resistance
- Use cases of buy now, pay later
- BNPL usage driven by discretionary spending
- Graph 28: buy now, pay later purchases in the last two years, 2025
- BNPL helps reduce the perceived financial commitment of non-essentials
- Increasing number turn to BNPL for everyday essentials
- Attitudes towards buy now, pay later
- Vast majority of users are confident in their understanding of BNPL
- Graph 29: attitudes towards buy now, pay later, 2025
- Growing affordability pressures boost appeal of BNPL
- Consumers are showing signs of brand loyalty
- BNPL cards will broaden usage and ingrain brand loyalties
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INNOVATION AND MARKETING TRENDS
- Competitive strategies and launch activity
- Klarna continues to expand through strategic partnerships…
- … and embed its solutions into payment ecosystems
- Zilch looks to expand its share of wallet with launch of physical card
- Clearpay introduces Spend Cap to enhance customer control
- Zilch expands its presence in the travel sector
- HSBC announces launch of Flexipay
- Advertising and marketing activity
- Zilch launches its biggest campaign to date
- Klarna launches new advertising campaign in partnership with Married at First Sight…
- … and teams up with Big Zuu in ‘Financial Takeaway’ series
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APPENDIX
- Report scope and definitions
- Market definition
- Abbreviations and terms
- Consumer research methodology
- Nielsen Ad Intel coverage
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