Table of Contents:
- What Does It Mean to Offer Finance to Customers?
- Why Businesses Are Choosing to Offer Finance in 2026
- The Different Ways You Can Offer Finance to Customers
- How to Offer Finance to Customers (Step-by-Step)
- What Are the Costs of Offering Finance?
- Risks and Compliance Considerations
- Is Offering Finance Right for Your Business?
- Best Practices to Maximise Results
- How Payl8r Helps You Offer Finance to Customers
- Final Thoughts
- FAQs
What Does It Mean to Offer Finance to Customers?
Offering finance to customers means enabling shoppers to spread the cost of a purchase over time, instead of paying the full amount upfront.
This is typically facilitated through a third-party lender who:
- Pays the business upfront
- Collects repayments from the customer over an agreed period
Common forms include:
- Buy Now Pay Later (BNPL)
- Instalment plans
- Interest-bearing credit agreements
Finance can be offered:
- Online via checkout integrations
- In-store via POS or assisted applications
A closer look at what retail finance really is and isn’t.
What does it mean to offer finance to customers?
It means allowing customers to pay for goods or services in instalments over time, typically through a regulated third-party provider who pays the business upfront.
Why Businesses Are Choosing to Offer Finance in 2026
Flexible payment solutions are now a core part of the UK retail landscape, driven by both consumer behaviour and commercial performance.
Increased Conversion Rates
Offering finance can reduce upfront cost barriers, making more customers more likely to complete purchases.
“BNPL can increase eCommerce conversion rates by 20–30%“
WebMedic, 2025
Higher Average Order Value (AOV)
When customers can spread payments:
- They are more likely to upgrade products
- Add complementary items
- Choose premium options
“The option to pay in installments often motivates shoppers to spend more than they initially planned.”
Commercetools
Growing Consumer Demand
Flexible payments are no longer niche they’re expected.
“More than half (54%) of UK adults have used BNPL.”
Finder, 2026
Competitive Pressure
If competitors offer finance and you don’t, customers may choose them instead especially for higher-value purchases.
The Different Ways You Can Offer Finance to Customers
Choosing the right finance model is key to success.
Buy Now Pay Later (BNPL)
- Short-term instalments (e.g. 1-6 months)
- Often interest-free
- Fast approvals and minimal friction
Best for:
- E-commerce
- Small/mid-value purchases (£50–£1,500)
Interest-Bearing Finance
- Longer repayment periods
- May include APR
- Structured agreements
Best for:
- Higher-ticket items
- Services (e.g. dental, cosmetic, education, automotive)
Second-Line Finance
Second-line finance allows you to offer finance to customers declined elsewhere.
This is a key commercial lever:
- Recovers lost sales
- Expands customer reach
- Improves approval rates
Discover tips to boost approval rates.
How to Offer Finance to Customers (Step-by-Step)
1. Choose a Finance Provider
Look for:
- UK-regulated lenders
- Flexible finance options
- Transparent pricing structures
2. Integrate Into Checkout or POS
Finance should be:
- Embedded into your checkout
- Available early in the journey
- Mobile-friendly
3. Set Approval Criteria
Most providers manage:
- Credit checks
- Affordability assessments
- Risk decisions
- Repayments
Payl8r uses soft credit checks within the application, helping reduce friction without impacting customer credit scores at the early stage.
4. Display Finance Messaging
Ensure visibility (compliantly):
- On product pages
- In marketing campaigns
- At checkout
5. Train Staff / Optimise UX
For in-store:
- Train teams to introduce finance compliantly
- Keep the checkout process quick
For more on this, take a look at our step-by-step guide to customer financing.
What Are the Costs of Offering Finance?
Understanding cost is critical when deciding whether to offer finance.
Merchant Fees
Businesses typically pay a per-transaction fee to the finance provider.
This varies based on:
- Industry
- Risk profile
- Finance type
Subsidised Interest
If offering 0% finance, merchants may cover part of the financing cost.
Operational Costs
- Integration and setup
- Staff training
- Marketing updates
However, these costs are often offset by performance gains.
According to Worldpay’s Global Payments Report:
“BNPL can deliver increased sales, higher average order value and a competitive advantage.”
Worldpay
Risks and Compliance Considerations
Offering finance requires careful handling to ensure customer clarity and regulatory alignment.
Clear Customer Communication (via Provider)
Your finance provider must clearly present:
- Total repayable amount
- Payment schedule
- Any interest or fees
Throughout the customer’s finance journey.
If you are creating financial promotions yourself adhering to compliance guidelines is a crucial part.
Responsible Lending (Provider-Led)
Your finance provider should:
- Conduct affordability checks
- Assess repayment suitability
- Provide transparent agreements
Payl8r supports this through structured affordability assessments and clear repayment terms.
Reputational Risk
Poorly communicated finance options can:
- Damage trust
- Increase complaints
- Lead to customer confusion
Clear, simple messaging is essential.
Is Offering Finance Right for Your Business?
Use this decision framework to decide whether finance is right for your business:
Average Order Value (AOV)
Finance is most effective when:
- Average product amounts exceed £50–£100
- Higher-value items benefit most
Industry Suitability
Strong use cases:
- Retail (furniture, electronics)
- Health & wellness
- Automotive services
- Education & training
Customer Behaviour
Finance performs best when customers:
- Value flexibility
- Prefer spreading payments
- Are price-sensitive
Is offering finance worth it?
Yes, for many UK businesses it increases conversions, boosts average order value, and improves affordability often outweighing the costs involved.
Best Practices to Maximise Results
Show Finance Early
Display monthly pricing on:
- Product pages
- Category pages
Ensuring that all financial promotions meet regulatory requirements. Use provider-given templates and iFrames where possible.
Keep Messaging Clear
Use:
- Transparent terminology
- Simple language
- Consistent positioning
- Required disclaimers and representative information
Whenever promoting finance options.
Promote Finance in Marketing
Highlight:
- “From £X per month”
- “Flexible payment options available”
Ensuring that Representative examples, APRs and disclaimers are included where necessary.
Offer Second-Line Finance
Capture customers who would otherwise be declined.
Optimise the Customer Journey
- Fast approvals
- Minimal friction
- Mobile optimisation
How Payl8r Helps You Offer Finance to Customers
Payl8r is designed to help UK businesses implement flexible finance quickly and effectively.
Key Features
Seamless Integration
- Works online and in-store
- Simple checkout integration for all major eCommerce platforms such as Shopify, WooCommerce, BigCommerce, Magento, Wix etc.
Second-Line Capability
- Capture declined customers
- Increase approval rates
Next-Day Payouts
- Maintain healthy cash flow
- Reduce financial exposure
Responsible Lending Approach
- Open-Banking enabled affordability checks
- Soft search application process
Flexible Finance Features
- Counter offer feature, allowing us to offer alternative, adjusted financing options to customers when they are not eligible for their first choice.
- Customer repayment plans from 3-24 months
- Tailored finance rates
Final Thoughts
Offering finance to customers is no longer just a checkout feature, it’s a growth lever.
When implemented correctly offering finance can:
- Increase sales revenue
- Improve checkout conversion rates
- Expand your customer base
The key to offering finance to your customers is rooted in making an informed decision; understanding costs, choosing the right model, and ultimately, working with the right provider.
Start offering finance today with Payl8r.
Frequently Asked Questions
FAQ’s on How to offer finance to customers a UK guide
How can I offer finance to customers in the UK?
Businesses in the UK can offer finance to customers by partnering with a regulated finance provider and integrating payment options into their website or in-store POS systems. The provider typically handles credit checks, approvals, and repayments, while the business receives payment upfront.
Solutions like Payl8r finance simplify this process with quick integration and support for both online and in-store transactions.
What are customer financing solutions?
Customer financing solutions are payment options that allow customers to spread the cost of purchases over time, usually through fixed instalments or credit agreements. These solutions are commonly offered via finance providers who manage lending and customer repayments.
They include Buy Now Pay Later (BNPL), interest-bearing finance, and longer-term payment plans, depending on the purchase value, customer profile and lender’s appetite.
What is retail finance in the UK?
Retail finance in the UK refers to credit options offered by businesses at the point of sale, enabling customers to pay for goods or services over time. It is commonly used in sectors such as retail, healthcare, and home improvements.
Retail finance providers typically pay the merchant upfront while the customer repays the loan value in instalments.
Payl8r was voted the Best Retail Finance Provider in the UK Consumer Credit Awards 2025.
Is Buy Now Pay Later (BNPL) good for merchants?
BNPL can be highly effective for merchants because it reduces upfront cost barriers for customers, often leading to higher conversion rates and increased average order value. It is particularly useful for eCommerce and mid-priced products.
Many UK businesses use BNPL as an entry point into broader customer financing solutions such as regulated retail finance and installment credit.
What are payment plans for customers?
Payment plans allow customers to split the cost of a purchase into smaller, scheduled payments over an agreed period of time. These can be interest-free or interest-bearing, depending on the finance provider and credit agreement.
They are commonly used to make higher-value purchases more accessible and manageable for customers.
How much does it cost to offer finance to customers?
The cost of offering finance typically includes a merchant fee per transaction and, in some cases, subsidised interest for 0% finance offers. Costs vary depending on the provider, industry, and risk profile.
Many businesses find these costs are offset by increased sales, higher basket values, and improved conversion rates, although results are not guaranteed.
Do I need FCA authorisation to offer finance to customers?
To offer finance to customers with Payl8r, you do not need to acquire your own FCA authorisation. Payl8r operates an Introducer Appointed Representative (IAR) model, allowing businesses to introduce their customers to regulated retail finance at the point of checkout. All IARs must follow financial promotion rules and ensure clear, compliant communication.
Can small businesses offer finance to customers?
Yes, small businesses can offer finance by partnering with providers that support SMEs and offer simple integrations. Many solutions are designed to be accessible without complex setup or large volumes.
Providers like Payl8r support businesses of all sizes, making it easier for SMEs to introduce flexible payment options.
Will offering finance increase sales?
Offering finance can increase sales by reducing upfront cost barriers, making purchases more accessible to customers. This often leads to higher conversion rates and increased average order value.
The impact is typically strongest for higher-ticket items or where affordability is a key consideration.
Payl8r’s merchants have seen increases in both average order values and overall conversion rates since integration. You can read more in our case studies here.
When should a business offer finance to customers?
A business should consider offering finance when it sells higher-value products, experiences cart abandonment due to price barriers, or wants to increase their average order value. It is particularly effective in competitive markets where flexible payments are expected.
What should I look for in a finance provider?
Key factors include:
- Transparent pricing
- Fast approvals
- Integration options
- Support for declined customers (second-line finance)
Providers that offer flexible solutions and strong customer outcomes are typically the most effective.
How quickly can I start offering finance?
Many modern finance providers offer quick onboarding and integration, allowing businesses to start offering finance within weeks depending on complexity.
Solutions like Payl8r are designed for fast setup with minimal disruption to existing systems. Once their IAR status has been confirmed, integration and onboarding can happen within a matter of days.