Should Small Online Stores Offer Buy Now, Pay Later?

Quick answer: Buy now, pay later (BNPL) lets customers split a purchase into instalments, while you are paid upfront by the BNPL provider, minus a fee that is usually higher than a normal card fee. It's worth offering if your average order is £50 or more, your products are gifts or "considered" purchases, and your margins can absorb the fee. Since 15 July 2026, BNPL lending in the UK is regulated by the FCA, but the rules apply to the lenders, not to shops that offer BNPL through an authorised provider.

Picture someone with a £120 basket in early December. They want the gift, but payday is on the 28th. At checkout they see "Pay in 3 interest-free instalments of £40". They complete the order. Without that option, a lot of those baskets quietly get abandoned. That's the case for BNPL. The case against is that it costs you more per sale and, used carelessly, encourages people to spend money they don't have.

Tekovex runs Shopify and marketplace stores for UK and US sellers, and our client stores have passed £1 million in UK sales. Here's a balanced look at BNPL for small stores this Christmas.

How big is BNPL at Christmas?

• BNPL drove $20 billion of US online holiday spending in 2025, up 9.8% (Adobe).
• Adobe expects BNPL to drive $21.3 billion in the 2026 US holiday season, including about $1.09 billion on Cyber Monday alone (Talk Business & Politics).
• Searches like "does TikTok Shop take Afterpay" are up 250% in the US over the past month.

How BNPL works for a shop

• The customer chooses BNPL at checkout and is checked by the provider.
• The provider pays you the full amount, minus its fee, usually within a few days.
• The customer repays the provider in instalments. If they miss a payment, that's between them and the provider.

Popular options include Klarna, Clearpay (Afterpay), PayPal Pay in 3 and others. Many plug straight into Shopify, WooCommerce and other platforms.

What does BNPL cost you?

Merchant fees vary by provider, plan and country, and are usually higher than standard card processing. Check each provider's current UK merchant pricing before you sign up. Build the fee into your pricing so a BNPL sale is still profitable.

The new UK rules (from 15 July 2026)

From 15 July 2026, deferred payment credit (BNPL) became regulated by the Financial Conduct Authority. Lenders must be authorised, check that customers can afford to borrow, give clear information and support people in financial difficulty (FCA). For shops, the main point is simple: only offer BNPL through an authorised provider, and describe it accurately.

When BNPL makes sense

• Your average order value is around £50 or more.
• You sell gifts, fashion, furniture, electronics or other planned purchases.
• Your margins can absorb the higher fee.
• You see a lot of abandoned checkouts on larger baskets.

When it probably doesn't

• Most orders are under £20–£30.
• Your margins are already thin.
• You sell mainly through marketplaces that handle payments for you (eBay, Etsy, Amazon, TikTok Shop), where you don't choose the checkout options.

How to offer BNPL responsibly

• Describe it accurately: say it's a form of credit and that missed payments can have consequences.
• Don't push it to sell more to people who can't afford it.
• Show the total price clearly next to the instalment price.
• Test it for one season and compare conversion and profit with and without it.

Frequently asked questions

Do small businesses get paid upfront with BNPL?

Yes. The provider pays you, minus its fee, and takes on collecting the instalments from the customer.

Is BNPL regulated in the UK?

Yes. Since 15 July 2026, BNPL lenders must be authorised and regulated by the FCA.

Does buy now, pay later increase sales?

It can increase conversion on larger orders, but results vary. Test it and compare profit, not just sales.

Can I offer BNPL on eBay or Etsy?

Payment options on marketplaces are controlled by the marketplace, so you can't add your own BNPL provider there.

Is BNPL bad for customers?

It's useful if used carefully, but it is borrowing. Clear information and responsible use matter.

Need help with your checkout?

Tekovex audits Shopify stores, including checkout and payment options, to find what's costing you sales. Get an ecommerce audit or book a free consultation.