More than a third of UK consumers say they’d be more likely to use instalment plans if those products were integrated directly with their bank, highlighting trust as a factor in adoption.
New survey data from Lloyds Merchant Services also shows flexible finance is now a powerful driver of retail choice and spend. Among current users, 61 per cent are more likely to shop with retailers offering buy now, pay later (BNPL), rising to 63 per cent for point-of-sale (POS) finance.
And appetite isn’t confined to small baskets: half of adopters are comfortable using BNPL for mid-ticket purchases between £100 and £500.
The Flex Economy: How Buy Now, Pay Later and POS Finance are Shaping the Next Era of Checkout report from Lloyds polled 2,000 UK consumers and 150 businesses. It finds that flexible finance is moving from add-on to expectation and increasingly a budgeting tool rather than emergency borrowing.
Cash-flow management is the primary motivator for using BNPL or POS finance, indicating these products are becoming part of everyday financial planning.
Retailers are feeling the pull from both sides of the checkout: 84 per cent report growing customer demand for BNPL and 87 per cent for POS finance, while those already offering these options cite clear commercial upsides.
Sixty-two per cent of merchants offering BNPL report higher average order values, and 54 per cent say POS finance boosts repeat business. It’s also strategic: 98 per cent of businesses say flexible finance is important to their growth plans.
Preparing for regulation
New BNPL rules are due to come into effect in 2026. The Financial Conduct Authority (FCA) plans to bring BNPL (referred to as Deferred Payment Credit) into regulation with a start date targeted for mid-July. The rules focus on clearer information and affordability checks, and requiring providers to be authorised.
According to Lloyds, 97 per cent of businesses say they’re already thinking ahead about how regulation will affect the purchase experience they offer – from affordability checks to how approval rates might impact conversion. Its report also includes practical guidance to help merchants embed finance responsibly; from choosing trusted partners to ensuring clear and transparent communication at checkout.
Melinda Roylett, MD at Lloyds Merchant Services, said: “The way people pay is evolving quickly, and merchants who stay ahead of the curve will benefit most.
“Embedding finance responsibly at checkout gives customers the control they want while helping businesses boost loyalty and growth.”
“Cash management is the number one reason people choose embedded lending, and we see this trend growing as households look for more options to support their spending.
“Our role is to help merchants turn this shift into stronger sales and lasting customer loyalty by offering responsible, regulated finance solutions.”
