Buy now, pay later: What is it and how does it work?

It's the newest way to pay for your online shopping. Here's everything you need to know about buying now and paying later.

BNPL providers in the UK Compare now
What's buy now, pay later? Learn about BNPL

What is buy now, pay later (BNPL)?

Buy now, pay later is a payment service that allows consumers to shop online and place orders right now but pay for them later. Most of the services split the final shopping total into 3 or 4 more manageable amounts. The first payment is usually due at the time of order, and then each additional payment is due a month apart.

Several BNPL services are available in the UK, and each has different terms and conditions and handles the idea of “paying later” differently. Most BNPL services offer 0% interest, but some charge interest or late fees if you miss a payment.

Before you sign up for any buy now, pay later service, be sure you have fully read and understood the terms and conditions (T&Cs) of your chosen service.

BNPL services available in the UK

Klarna logo
Clearpay logo
Laybuy logo
Payl8r logo
DivideBuy logo
Zip logo
Zilch logo
Flava logo
Paypal logo

What are the benefits of using buy now, pay later services?

Finder conducted a survey in July 2020, asking 2,000 Brits why they chose to buy now, pay later. Ease and convenience was the number one factor, with the ability to spread the cost of purchases over a longer period coming in second.

BNPL preferences

Why are more brands offering buy now pay later services at checkout?

To stand out in an increasingly saturated market, retailers need other avenues besides price to incentivise consumers.

Offering interest-free buy now, pay later (BNPL) services is an increasingly popular benefit rolled out to attract shoppers, especially during the pandemic. This is because consumers have come to expect BNPL: Nearly 9.5 million Brits said they avoided stores that didn’t offer BNPL in a study from February 2020 by market research agency Harris Interactive.

Clearpay v Klarna

Does using a BNPL service affect my credit score?

This can depend on a few factors. Each BNPL service deals with credit checks in a different way, so be sure to read the T&Cs of your chosen provider. Generally, if you can repay your loan as agreed and don’t miss any payments, your credit score shouldn’t be negatively impacted and, in fact, could improve. If, on the other hand, you fail to pay on time or miss 3 monthly payments, your credit score is likely to deteriorate. As of Spring 2022, all 3 CRAs (Experian, Equifax and TransUnion) show BNPL data on credit reports.

  • Warning: Late repayments can cause you serious money problems. For help, contact the MoneyHelper.

Where can I shop when using BNPL?

Thousands of retailers now offer BNPL options at the checkout. The biggest UK BNPL providers Klarna and Clearpay have +2,000 partner stores between them.

LovehoneyLovehoney
Pay later!

Shop now, pay later with Klarna

Get deal
Pay later!
ASOSASOS
Pay later!

Shop with Klarna at ASOS to buy now and pay later

Get deal
Pay later!
boohooboohoo
Klarna

Shop now, pay later with Klarna

Get deal
Klarna
SchuhSchuh

Buy now, pay later with Klarna

LOOKFANTASTICLOOKFANTASTIC
Pay later!

Buy now pay later with Clearpay at LOOKFANTASTIC

Get deal
Pay later!
boohooboohoo
Pay later!

Clearpay: Buy now, pay later at boohoo

Get deal
Pay later!
boohooMANboohooMAN
Pay later!

Buy now and pay later with Clearpay at boohooMAN

Get deal
Pay later!
PrettyLittleThingPrettyLittleThing
Pay later!

Buy now, pay later at PLT with Clearpay

Get deal
Pay later!

Although some retailers work exclusively with one particular BNPL provider, in December 2020, PayPal launched its Pay in 3 service, which can be used at most retailers that provide PayPal at checkout. Digital bank Monzo also offers its own BNPL service, Monzo Flex, which can be used pretty much anywhere that accepts Mastercard.

Buy now, pay later: Is it a good idea?

rachelwait profile pic
Rachel Wait

Writer

BNPL services have become unbelievably popular over the past few years, and on the face of it, they look like a great way to help you spread the cost of your purchases. However, it can be easy to forget that they are a form of borrowing, and ultimately, they could affect your credit record.

If you are tempted to use a BNPL service, the key is to use it sensibly. BNPL can be ideal if you want to try before you buy, but only if you actually send back the items you don’t want to keep. Don’t be tempted to spend more than you can afford to repay, and always be sure you’ve read and understood the small print. Make sure you know how much you could be charged if you miss a repayment, and remember that it’s likely this will be recorded on your credit report. Even if this does not directly affect your credit score right now, it could affect your ability to get accepted for credit in the future.

Finally, keep in mind that, unlike a credit card, your purchases will not be protected by Section 75 of the Consumer Credit Act. This protects purchases of more than £100 and up to £30,000 in the event something goes wrong. The exception is Monzo Flex.

Bottom line

Buy now, pay later services have a number of benefits, but if you’re thinking about using one, you need to be absolutely sure what you’re signing up for. You also need to be sure that you can make your repayments on time and in full to avoid any unnecessary fees and a possible drop in your credit score.

Almost 4 in 10 Brits say they have used a buy now pay later service, with 44% of shoppers naming ease and convenience as the main reason.

Discover more interesting statistics about buy now pay later, online shopping and more in our report.

Download the shopping report for free
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Buy now, pay later compared

Name Product Automatic payments Early repayment option Payment term options Free to use Late payment fee More info
Clearpay
Yes
Yes
4 equal payments
£6
Klarna
Finder Award
Klarna
Yes
Yes
Pay later, Pay monthly, 3 equal payments
Up to £5
Laybuy
Yes
Yes
6 equal weekly payments
£6
Payl8r
Yes
Yes
Pay later, Pay monthly
£15
DivideBuy
Yes
Yes
Pay monthly
Variable
Splitit
Splitit
Yes
Yes
Pay monthly
£0
Zip
Yes
Yes
4 equal payments
£4
Zilch
Yes
Yes
4 equal payments
£0
Pollenpay
Yes
Yes
Pay later
£5
PayPal Credit
Yes
Yes
Pay later, Pay monthly
£12
Butter
Finder Award
Butter
Yes
Yes
Pay later
£12
Virgin Money Slyce
Yes
Yes
Pay later, Pay monthly
£0
PayPal Pay in 3
Yes
Yes
Pay later, Pay monthly, 3 equal payments
£0
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