Buy now, pay later for small UK shops after the FCA rules changed

This page answers two questions for anyone running a small UK online shop: has the FCA’s new buy now, pay later regime put any new duty on you, and is Klarna at your checkout worth what it costs. Short version on the first: the lender gets regulated, not you, though you still have to present the option fairly. Short version on the second: Klarna publishes no UK merchant rate, so the honest way to decide is arithmetic against a published benchmark. Every rule and price below was checked against the FCA and the providers’ own pages on 15 September 2026. We build Orbit Commerce, an ecommerce platform with Klarna built into the checkout, so we have a stake in you opening a shop. Every figure is linked to its source so you can check it without us.

What changed on 15 July 2026?

The FCA began regulating Deferred Payment Credit, the formal name for buy now, pay later, on 15 July 2026. Firms entering into these agreements must now be authorised for the relevant consumer credit activities or hold a temporary permission under the DPC temporary permissions regime (fca.org.uk, page last updated 15/07/2026, checked 15 September 2026). Before that date, interest-free BNPL sat outside the consumer credit rules almost entirely.

What the shopper gets out of it, per the FCA’s own announcement (press release, 11 February 2026, checked 15 September 2026):

• Lenders must run proportionate checks that the customer can afford to repay before offering BNPL.
• Customers get clear, upfront details of the agreement: when payments are due, the amounts, and what happens if they miss one.
• Lenders must support customers in financial difficulty and, where appropriate, point them to free debt advice.
• “If something goes wrong, consumers will be able to complain to the Financial Ombudsman Service.” That complaints route did not exist for BNPL before.

That last one matters more than it looks, and it lands on the lender rather than on you.

Does the new regime affect a shop that just offers Klarna at checkout?

No, not in the sense of needing FCA authorisation. The regime bites on the firm entering into the credit agreement, and the FCA’s definition turns on the point that “the lender and the supplier of goods or services are not the same person” (fca.org.uk, checked 15 September 2026). When a customer picks Klarna at your checkout, Klarna is the lender and you are the supplier. Klarna carries the permission, the affordability checks and the ombudsman exposure. You carry none of them.

What you still have to do is unglamorous but real. Present the option fairly: don’t preselect BNPL, don’t bury the card option, and don’t describe it in a way that makes a credit agreement sound like a payment method with no consequences. Keep the terms visible where the customer chooses, so the number of payments and the dates are on screen rather than one click away. And keep your own advertising accurate, because consumer protection law applies to how you describe prices whoever is lending. If you promote BNPL in ads or on product pages, check whether the financial promotion rules touch your wording, and get advice if you’re unsure.

One line of housekeeping: this is a plain-English summary for shop owners, not legal advice. Read the FCA page yourself before relying on any of it, and speak to a solicitor if your setup is unusual.

What does Klarna actually cost a small UK merchant?

Klarna does not publish UK merchant rates. Its UK business site sends merchants to a signup or a partner integration rather than a price list (klarna.com/uk/business, checked 15 September 2026). Clearpay is the same: its retailer page asks you to “Tell us about your business so we can connect you with the right team” with no rates on the page (clearpay.co.uk, checked 15 September 2026). So anyone quoting you “Klarna charges X%” from a blog post is guessing or repeating a figure from someone else’s negotiated contract.

There are two published numbers you can actually use. Stripe’s UK pricing page lists BNPL at “Starting at 4.99% + 35p per successful transaction for Klarna”, against 1.5% + 20p for standard UK cards (stripe.com/gb/pricing, checked 15 September 2026). And Orbit publishes its own: Klarna at 4.99% + 30p on every plan, alongside card rates from 2% + 25p on Solo down to 1.5% + 25p on Pro (orbitcommerce.net/pricing, checked 15 September 2026). Published BNPL rates are rare in this market, which is the main reason we quote ours.

Note what the table doesn’t show: a platform fee on top. Orbit takes no transaction cut of its own, so the rate above is the rate. For the full picture of card costs before you add BNPL to it, our guide to payment processing fees for a UK online shop breaks down every line.

Does BNPL pay for itself? A break-even worked example

Plenty of people will quote you a conversion uplift percentage for BNPL. We won’t: there’s no primary source we’d stand behind, and the figures that circulate come from the lenders’ own marketing. Work out the lift you’d need instead, then judge whether it’s plausible for your shop. Take a £60 basket on Orbit’s Solo plan, with the assumptions stated:

The BNPL order costs you £1.84 more. That is the whole question, expressed in money. Turn it into the sales you’d need to cover it, at three gross margins:

So on a 40% margin, a Klarna order has to be worth roughly 7.7% more than the card order it replaced, either because the basket is bigger or because the order wouldn’t have happened at all. That reading assumes every order shifts to BNPL.

The optimistic reading is more realistic, because BNPL only costs you on the orders that use it. Say you take 100 orders a month at £60 and 20 of them go through Klarna. The extra cost is 20 × £1.84 = £36.80 a month. At a 40% margin you need £92 of additional sales to cover that, which is one and a half extra £60 orders. If offering BNPL wins you two orders a month that would otherwise have bounced at the payment step, it has paid for itself and a bit more. Whether it does is a question you can answer with your own numbers after a month, not one a blog can answer for you.

Before you add a payment method to chase conversion, it’s worth checking the cheaper fixes first. Delivery cost shown late, a forced account creation and a slow payment step lose more orders than the absence of BNPL does: see checkout conversion quick wins. And if the problem is people leaving with a full basket, recovering abandoned carts costs you nothing per order.

Klarna, Clearpay or your own instalment plan?

Three different things get called “pay later”, and only two are BNPL in the FCA’s sense.

• Klarna. Widest recognition in the UK, several products (pay in three, pay in 30 days, longer financing), and you get paid up front while Klarna carries the credit risk. Rate by quote, or at a published rate through a platform or gateway that resells it.
• Clearpay. Pay in four instalments, strong in fashion and beauty, same commercial shape: you’re paid up front, they carry the risk, rate by quote.
• Your own instalment plan. You let the customer pay in parts directly to you. No third-party lender, no per-transaction BNPL premium, but you carry the risk of them stopping halfway and you wait for your money.

That third option exists in Orbit as per-product instalment plans: daily, weekly, monthly or yearly intervals, an optional setup fee, and early payoff whenever the customer likes, with each part-payment landing in your payout reports as it arrives (orbitcommerce.net/sell/products and /payments/finance, checked 15 September 2026). Check the current plan table on the pricing page before you build a launch around it. It suits high-ticket items and made-to-order work more than a £40 impulse buy.

On the regulatory question: the FCA page defines the new regime around agreements where the lender and the supplier are not the same person, which is not the case when you finance the purchase yourself. But the page does not spell out an exemption for merchants offering their own terms, and other consumer credit rules can still apply depending on how your terms are written. Check the FCA page for whether your own instalment terms are in scope, and take advice before you launch one. A deposit plus balance on despatch is a much simpler arrangement than twelve monthly payments.

What happens when a BNPL order is refunded or returned?

Your side of it is ordinary. The customer’s cancellation and refund rights are exactly the same as on a card order: 14 days from delivery to change their mind under the distance selling rules, then 14 days to return the goods, and you refund within 14 days of getting them back including the standard delivery they paid. The full detail is in our guide to UK returns law for online shops, and gov.uk is the place to check before relying on it.

Mechanically, you refund the order through your dashboard the same way you would a card order, the money goes back to the lender, and the lender adjusts or cancels the customer’s remaining instalments. Two practical points. First, partial refunds are where the confusion happens: the customer keeps seeing a payment schedule until the lender updates it, so tell them the refund has gone and it may take a few days to show on their plan. Second, assume the percentage fee does not come back to you on a refund unless your provider says in writing that it does, and price accordingly. On a £60 order that’s £2.99 you may not see again.

Questions people ask about buy now, pay later for small UK shops

Do I need FCA authorisation to offer Klarna on my website?

No. The FCA’s deferred payment credit regime, live since 15 July 2026, applies to the firm entering into the credit agreement, where “the lender and the supplier of goods or services are not the same person” (fca.org.uk, checked 15 September 2026). Klarna is the lender and holds the permission. You are the supplier, and you need no authorisation to accept it at checkout.

How much does Klarna cost a UK merchant?

Klarna does not publish UK merchant rates and routes merchants to a quote (klarna.com/uk/business, checked 15 September 2026). The published benchmarks are Stripe at “Starting at 4.99% + 35p” per BNPL transaction and Orbit at 4.99% + 30p on every plan (both checked 15 September 2026). Treat any other percentage you read online as unverified.

How much extra do I need to sell for BNPL to pay for itself?

Work it from the fee gap. At 4.99% + 30p versus a 2% + 25p card rate, a £60 order costs £1.84 more on BNPL. On a 40% gross margin you need £4.60 of extra sales per BNPL order to break even, about 7.7% more basket. If only a fifth of your orders use it, the monthly cost on 100 orders is roughly £37.

Can customers complain to the Financial Ombudsman about a BNPL order?

Yes, since 15 July 2026. The FCA confirmed that “if something goes wrong, consumers will be able to complain to the Financial Ombudsman Service” (FCA press release, 11 February 2026, checked 15 September 2026). The complaint is about the credit agreement and goes to the lender. Complaints about the goods themselves remain yours to sort out under ordinary consumer law.

Is running my own instalment plan regulated?

Possibly, and it depends on your terms. The FCA’s new regime is defined around agreements where the lender and the supplier are not the same person, which is not your situation when you finance the purchase yourself, but the page does not set out an exemption for merchants and other consumer credit rules can still apply. Check the FCA page and take advice before launching one.

If you want to try BNPL without an app subscription or a negotiation, Klarna is one of the payment options built into Orbit Payments alongside cards, Apple Pay, Google Pay and PayPal, at a rate we publish rather than quote: 4.99% + 30p on every plan, with no platform fee on top. Per-product instalment plans are in the same dashboard if you’d rather keep the credit in-house. Build the shop, run your own break-even numbers against a real checkout, and decide then: there is a 14-day free trial, no card required, so you can start free and cancel any time.