Offering the right retail finance options can significantly improve your checkout experience and help customers choose the payment method that best suits them. As the UK retail landscape evolves, instalments and flexible repayment choices have become a familiar part of how people shop, not a sign of financial distress, but a preferred way to manage payments clearly and confidently.
This guide breaks down the main types of retail finance options available, recent consumer insights, and how retailers can choose a solution that aligns with responsible practice and customer expectations.
Key Summary of Retail Finance Options
- The average cart abandonment rate is 70.22% (Baymard Institute).
- 27% of UK adults used BNPL in the past year (FCA Financial Lives Survey 2024).
- 42% of UK adults say they have used BNPL at least once (Finder 2025).
- 62% of UK adults say they are adjusting their non-essential spending (ONS).
- Offering clear and flexible checkout options supports customer choice and modern buying behaviour.
What are Retail Finance Options?
Retail finance options allow customers to split the cost of a purchase into instalments, either interest-free, interest-bearing, or through short-term BNPL arrangements. These options give customers more control over how they pay, supporting transparency and helping them choose a method that fits their spending preferences.
According to the FCA’s Financial Lives Survey 2024, 27% of UK adults used BNPL in the preceding 12 months, reflecting how common instalment-based payments have become. Finder’s 2025 consumer survey also reports that 42% of UK adults have used BNPL at least once, showing broad familiarity with this type of payment.
Retail finance options can support retailers by:
- Providing customers with payment choice
- Making purchases feel more manageable
- Improving confidence during the checkout journey
- Offering structured, predictable repayment schedules
| Finance Option | How it Works | Best Suited For |
|---|---|---|
| Interest-Free Credit | Customer pays in instalments with 0% interest | Lower-to mid-value purchases and frictionless checkout. |
| Interest-Bearing Credit | Repayment instalments include interest over a longer term. | Higher-value purchases where extended repayment helps affordability. |
| Buy Now, Pay Later (BNPL) | Customer pays later or spreads payments over short (currently) unregulated instalments. | Customers wanting short-term flexibility and minimal upfront cost. |
All finance options should be offered with clear information so customers can make informed decisions that suit their circumstances.
How to Choose the Right Retail Finance Option for Your Business
1. Understand your customers’ payment preferences
ONS data shows many adults are more mindful of how they manage their spending. Offering choice at the checkout can help support different budgeting approaches, whether that means paying upfront or spreading costs in a structured way.
2. Work with an FCA-regulated provider
An FCA-regulated lender ensures customers have appropriate protections, clear disclosures, and responsible assessments before taking out finance.
3. Improve checkout experience through flexibility
With an average of 70.22% cart abandonment (Baymard Institute), retailers benefit from addressing friction at checkout. Providing retail finance options can help meet diverse customer preferences and support a smoother journey.
4. Choose repayment terms that work for your customers
Consider:
- Loan values
- Term lengths
- Interest-free or interest-bearing options
- Affordability checks
- Integration and customer experience
The right mix improves transparency and helps customers select the option that works best for them.
Why Retail Finance Options Improve Checkout Performance
Retail finance can support a more user-friendly checkout by giving customers choice and control over how they complete a purchase. They can:
- Make purchases feel more manageable when customers prefer spreading payments
- Reduce hesitation by offering multiple ways to pay
- Improve confidence at checkout by providing predictable repayment structures
- Support modern customer expectations around flexibility
- Help retailers offer a smoother, more accommodating buying experience
Retail finance is not a replacement for affordability – it is a payment preference that many customers now expect as part of a well-designed checkout.
Second-Line Retail Finance Options for Retailers With a Prime Provider
For retailers already partnered with a prime lender, adding a second-line retail finance provider can extend payment options to customers who fall outside prime criteria. Prime lenders tend to focus on narrower credit profiles, meaning some customers are declined even when they have clear purchase intent and can reasonably afford the repayments.
A second-line retail finance provider like Payl8r:
- Automatically steps in after a prime finance decline
- Gives customers an additional, regulated path to apply
- Creates a more inclusive checkout journey
- Helps retailers avoid losing customers for credit-tier reasons alone
- Works alongside – not in competition with – prime lending
This approach broadens accessibility while remaining aligned with responsible lending standards.
Payl8r: Retail Finance Options Made Simple
Payl8r offers flexible, FCA-regulated finance solutions that help retailers provide a modern, customer-focused checkout experience.
With Payl8r, merchants can offer:
- Regulated finance from £50-£3,000
- Payment terms from 3 to 24 months
- Interest-free and interest-bearing instalment options
- Fast, responsible application decisions
- Seamless e-Commerce and in-store integration
Our focus is to help UK retailers meet customer expectations with flexible payment options delivered responsibly.
FAQs about Retail Finance Options
Are retail finance options suitable for all business sizes?
Yes. Retail finance providers, such as Payl8r, can support both SMEs and enterprise businesses by offering additional payment choices to customers, both first and second line.
Can retailers offer multiple finance types?
Yes. Many retailers choose to offer a mix of interest-free, interest-bearing and subprime options to meet different customer demographics and preferences.
Do retail finance options help reduce abandoned baskets?
They can. While many factors influence checkout abandonment, offering more payment choice, including retail finance options, helps to address some of the common friction points that cause customers to abandon their checkout.
Can retail finance options be integrated into both online and in-store journeys?
Yes. Many lenders, like Payl8r, offer solutions that work across e-Commerce platforms and physical retail stores. This helps businesses provide customers with consistent payment choices wherever they shop.
What is the difference between first-line and second-line retail finance?
A first-line finance provider, often called a ‘prime lender’ handles the initial credit application at checkout. A second-line provider is used when a customer is declined by the prime lender, offering an alternative assessment and potentially approving customers who fall outside of traditional prime criteria. This creates a more inclusive checkout journey without replacing existing relationships with finance providers.
Ready to Explore Retail Finance Options for Your Business?
The right retail finance options can enhance your checkout experience, support customer choice, and help retailers meet evolving expectations responsibly and transparently.
If you’d like advice tailored to your business, speak to Payl8r’s onboarding team today.