2021 Trends: The Rise Of Buy Now, Pay Later

by Lucy Robinson

What is Buy Now, Pay Later (BNPL)?

Buy now, pay later is a growing payment option which allows customers to shop online and place an order, but pay later. These services allow customers to buy on credit and usually offer 0% interest, which is hugely appealing to anyone wishing to make purchases before payday, during a period of reduced income or if they do not own a credit card. There are however often fees or interest charged for late payment, so it is crucial to ensure you check out the Terms and Conditions of any BNPL service before going ahead with the transaction.

There are a variety of BNPL services operating in the UK and globally, which commonly give the option to split payment into 3 or 4 amounts across a set time frame (usually per month). Some well known examples of these service providers include:

In this blog article, our Lincolnshire eCommerce experts from iocea will address the burning questions that you might have about BNPL. Hopefully, we can provide some interesting insights which might encourage you to consider offering BNPL to your customers!

Why should we offer Buy Now, Pay Later to customers?

According to Finder, Buy now pay later (BNPL) is the fastest growing online payment method in the UK, with a growth rate double that of bank transfers and more than triple that of digital wallets.

Finder (2020) also found these interesting statistics, which indicate just how valuable BNPL services are to both customers and retailers:

  • 9.5 million Brits said that they avoided buying from retailers that don't offer BNPL services! Of all of the data found online, this might be the thing that stands out most. This really highlights the growing importance of offering BNPL to customers, showing how important it is to stay up to date, as customers will simply shop elsewhere if their needs aren't being met.
  • BNPL options benefit retailers by increasing customer loyalty and basket conversions and boosting sales by up to 30%! Remember that BNPL not only provides value to customers, but it is highly beneficial for the retailer too. Offering BNPL really is a win, win situation!
  • 8.6 million Brits plan to use BNPL in the future! This indicates a growing market and demand for this service, which retailers should offer in order to satisfy customers and stay ahead of the competition.

Online shopping

Who are the users of Buy Now, Pay Later services?

Finder (2020) reported that 37% of Brits saying they have used Buy Now, Pay Later, but what does the market for BNPL services look like? Who are the people using BNPL?


Younger generations are statistically much more likely to use BNPL services, with Finder stating that Millenials (1981 - 1996) using this payment option more than any other generation. 54% of Millenials say that that they use BNPL, compared with 50% of Generation Z (1966+), 37% of Generation X (1965 - 1980), 23% of Baby Boomers (1946 - 1964) and finally, only 12% of the Silent Generation (1928 - 1945). You will notice that the key players in BNPL, such as Klarna and Clearpay, are very heavily marketed towards a younger audience, which are their primary demographic. 


Buy Now, Pay Later services seem to be more popular with men than with women, with 41% of men saying they use BNPL compared with 33% of women.

Location (UK)

According to Finder's research, 48% of Londoners say that they use BNPL, followed by 40% of consumers living in the East Midlands and 38% of consumers living in the South East. East England had the lowest percentage of residents using Buy Now, Pay Later services, which was 31%.


When Finder conducted research into the reasons why customers were using BNPL services, they found 6 major motivations for using them. These were:

  • Convenience
  • Spreading costs out over a longer time
  • Access to interest-free payments
  • To pay for purchases that they couldn't otherwise afford
  • To try items that are delivered, without needing to pay for them first
  • To avoid using a credit card or other borrowed finance

How do Buy Now, Pay Later service providers make money?

One of the big questions that we often hear people ask is, if BNPL providers aren't charging customers interest, then how do they make money? BNPL providers may make some revenue from charging late fees or interest for late repayments, but their main source of revenue comes from charging online retailers a cut of the sale, which they receive in return for them providing a valuable service to the retailers customers. 

Think of it like this, Sally is looking online for a pair of school shoes for her daughter. Currently, Sally is experiencing some cash flow problems due to being placed on furlough, but desperately needs to buy these shoes. Sally visits two online retailers to purchase these shoes and finds that one is offering Klarna, but the other is not offering any Buy Now, Pay Later options. As Sally cannot afford to buy the shoes outright, she opts to purchase from the retailer that offers Klarna at checkout. By offering Klarna, this retailer has been able to make a sale which they wouldn't have been able to make had they not offered the BNPL option. This not only offers the retailer the opportunity to generate more sales, but it also gives them a competitive advantage over rivals who aren't offering a similar option.

So, in return for providing the BNPL service, providers will usually charge a cut of around 2-8% of the purchase amount.

Which Buy Now, Pay Later provider is best?

Klarna is often the first Buy Now, Pay Later provider of choice, as they offer some of the most flexible repayment terms available. Installments can be paid every two weeks, over 6 - 36 months and are interest-free (with no late payment fees), making Klarna an attractive choice for consumers. 

In terms of app downloads, Finder reported that Klarna was the most popular amongst it's rivals, gaining 986,000 downloads in the UK between January 2020 and July 2020, compared with 435,000 downloads of My Argos Card, 298,000 of Clearpay, 162,000 of Laybuy and 44,000 of Openpay.

In March 2020, Klarna announced that it had reached 7 million UK users, which is over double the amount of users that they had in March 2019. They also reported a 3,143% increase in active monthly users, which was claimed to be 460,000 in July 2020.

Klarna buy now pay later

How can we add Klarna payment to our website?

Iocea eCommerce Solutions are partnered with Klarna, which means that our website developers are able to add Klarna payment options onto your website and checkout. In addition to Klarna, we also offer PayPal Credit which is another popular choice with customers. As we have explained throughout this article, there are a wide variety of reasons that your business should offer a Buy Now, Pay Later option at checkout. Including meeting growing customer demands, gaining a competitive advantage, maximising sales potential and increasing customer loyalty.

Our Lincoln website development team are equipped with specialist knowledge and expertise to be able to add a variety of payment options to your checkout, including Klarna, Sagepay, PayPal, PayPal Credit and Creditcall. Whilst these are the main payment options which are requested by our existing website development clients, we can integrate any payment services to your website.

For more information about our services, visit iocea or get in touch today for a consultation with one of our eCommerce experts.