UK sellers can add Klarna and Clearpay (Afterpay) to their checkout in an afternoon — usually through their payment provider rather than a separate contract — and doing so tends to lift average order value and conversion, provided you understand the fees, the returns friction, and the responsible-lending expectations that come with it. Buy-now-pay-later (BNPL) is now a mainstream UK payment method, not a novelty. But it isn't free money, and it's about to become a regulated product. This guide covers how it works, what it really costs, and how to offer it without misleading your customers.
Quick note before we start: this is general information for merchants, not legal or financial advice. BNPL regulation is moving, so check the current rules and GOV.UK or the FCA for the latest position before you make promises to customers.
What BNPL actually is (and who the big UK players are)
Buy-now-pay-later lets a shopper split a purchase into instalments — most commonly three or four payments — or defer payment for 30 days, usually at 0% interest to the customer. The BNPL provider pays you, the merchant, up front and in full, then collects from the customer over time and carries the repayment risk.
In the UK, the names your customers already recognise are:
Klarna — the largest, offering "pay in 3", "pay in 30 days", and longer financing options. Deep integration with UK retail and a shopping app that drives its own traffic.
Clearpay — the UK/EU brand of Afterpay, focused on "pay in 4" fortnightly instalments. Strong in fashion, beauty, and lifestyle.
PayPal Pay in 3 — bundled with a PayPal merchant account, so many sellers already have access.
The key thing to understand is the split of responsibility: you get paid in full up front, the provider owns the customer's repayment risk, and in exchange the provider takes a fee that's higher than a normal card transaction. That trade — you swap a slice of margin for reduced risk and (usually) a bigger basket — is the whole economic argument for BNPL.
Why it can lift average order value and conversion
The reason retailers keep BNPL enabled isn't fashion — it's the numbers. Splitting a payment changes how a price feels at the moment of decision. "£120" is a considered purchase; "£30 today, then three more" is an impulse. Two effects show up repeatedly:
Higher average order value. Shoppers trade up to the better version, add the extra item, or clear the free-shipping threshold because the per-payment number stays comfortable. This matters most above roughly £50–£60, where instalments do real psychological work.
Fewer abandoned carts. Price shock at checkout is a leading cause of abandonment. Offering a smaller upfront number keeps hesitant buyers moving. If cart abandonment is your problem, BNPL is one lever — checkout trust and clarity is the bigger one, and the two compound.
There's also a discovery angle. Klarna and Clearpay both run their own shopping apps and directories that send traffic to merchants who accept them. For a young brand, being listed can be a modest but genuine acquisition channel.
A word of honesty, though: the "30% uplift" figures BNPL providers quote in their marketing are best-case averages across large retailers. Your uplift depends on your price points and audience. Treat it as "likely helps, especially on higher-ticket items," not a guaranteed multiplier.
The costs and trade-offs nobody puts on the landing page
BNPL is a commercial decision, so price it like one.
Higher provider fees. BNPL typically costs the merchant more than a standard card payment — often a percentage plus a fixed fee per transaction, and usually a few points higher than card rates. That's the price of the provider taking on repayment risk and funding the instalments. On thin-margin products, model it before you switch it on.
Returns are more complicated. When a customer returns a BNPL order, the refund has to flow back through the provider so their repayment schedule is cancelled or adjusted. It works, but it's an extra moving part, and getting it wrong generates support tickets and unhappy customers who are still being billed. Make sure your returns process accounts for it.
Chargebacks and disputes. BNPL doesn't remove dispute risk — an "item not received" claim can still land, and the customer may pause payments with the provider while it's unresolved. The provider carries credit risk, not fulfilment risk. That stays with you.
Brand fit. BNPL suits considered, higher-value, lifestyle-led purchases. For very low-value impulse items it adds fees without adding much, and for some audiences the association with instalment borrowing sits awkwardly with the brand. Know your customer.
None of this is a reason to avoid BNPL. It's a reason to treat it as a paid feature that earns its keep on some products and not others — and to keep an eye on the fee stack overall. If you want the full picture of what different providers and platforms take, our guides on the best UK payment gateways and what percentage e-commerce platforms take break the numbers down.
Where UK regulation is heading — get this right
For years, most interest-free BNPL sat outside the Financial Conduct Authority's consumer-credit rules — a genuine gap that let the sector grow fast with light-touch oversight. That is changing. The government has confirmed it intends to bring BNPL products into FCA regulation, and the direction of travel is clear even where exact dates and detail are still being finalised.
Broadly, regulation is expected to move BNPL towards the standards that apply to other regulated credit:
Clearer, fairer information for customers about what they're signing up to.
Affordability and creditworthiness checks by the provider.
Proper complaints routes, likely including access to the Financial Ombudsman Service.
Rules on how BNPL can be promoted and advertised.
For most merchants the heavy lifting falls on the provider, not you — Klarna and Clearpay have to meet the new standards. But it affects how you're allowed to present and promote BNPL on your own site. The practical takeaway: don't market BNPL as "free money" or imply there are never consequences to missing payments. Describe it factually as a payment option, let the provider's own messaging and terms do the regulated talking, and keep your promotional copy honest. Because the rules are in flux, verify the current position on GOV.UK or with the FCA — and if in doubt, a compliance professional — rather than relying on a blog post's snapshot.
How to present BNPL responsibly at checkout
Responsible presentation isn't just about compliance — it's about not attracting customers who'll struggle to pay, then charge back or complain. A few principles:
Show it as one option among several, not the hero. Card, Apple Pay, Google Pay, PayPal, and BNPL side by side. Let the customer choose the way that suits them.
Use the provider's approved messaging. Klarna and Clearpay supply on-site widgets ("or 3 payments of £X with Klarna") that are designed to meet advertising standards. Use those rather than writing your own claims.
Be honest about the total. The full price is the full price. Instalments change the timing, not the amount. Never imply a discount that isn't there.
Keep your returns and refunds policy crystal clear, because BNPL customers are more sensitive to billing confusion. A clean policy prevents most of the disputes that erode BNPL's benefit.
Setting it up on Dirora
On Dirora, BNPL isn't a bolt-on you have to negotiate separately. Klarna and Clearpay (Afterpay) are available through Stripe, alongside Apple Pay and Google Pay, and they're configurable from day one on every plan. PayPal is available as an additional provider if you want Pay in 3 as well. You enable the methods you want, and the approved on-site messaging renders on your product and checkout pages automatically.
On pricing, the important part for margin planning: card payments run at standard processing rates with no surprise markup, and Dirora charges 0% transaction fees on every plan. The only cut is a small platform fee that falls as you grow — 1.5% on the free and Starter tiers, 0.75% on Pro, 0.25% on Business, and 0% on Enterprise. BNPL providers still charge their own fee for the BNPL service itself (that's unavoidable and set by them), but Dirora doesn't stack an extra transaction fee on top. On a payment method that already costs more than cards, not paying a second platform tax matters. You can see the full breakdown on the pricing page.
Because BNPL tends to work best on higher-value baskets, it pairs naturally with the other levers that raise order value: strong product pages that justify the price, and a trustworthy checkout that doesn't lose the sale at the final step.
The verdict
For most UK stores selling considered, mid-to-higher-value products, offering Klarna and Clearpay is a straightforward yes: it lowers the perceived price at the decision point, lifts average order value, and meets a customer expectation that's now mainstream. The costs are real — higher provider fees, fiddlier returns, and a regulatory landscape that's tightening — but they're manageable if you switch BNPL on with your eyes open, present it honestly, and keep the rest of your fee stack lean. Enable it where it earns its keep, use the providers' compliant messaging, and let it do its quiet work on your basket sizes.
Frequently asked questions
How do I add Klarna or Clearpay to my UK online store?
Most sellers add BNPL through their payment provider rather than signing a separate contract. On platforms that integrate Stripe, Klarna and Clearpay (Afterpay) are available as payment methods you switch on in settings, and the approved on-site messaging appears automatically. You don't usually need a direct merchant agreement with each BNPL provider.
How much does BNPL cost the merchant?
BNPL usually costs more than a standard card payment — typically a percentage plus a fixed fee per transaction, a few points above card rates, set by the provider to cover repayment risk. The customer normally pays 0% interest; the merchant absorbs the fee. Model it against your margins, especially on lower-value items.
Does offering BNPL really increase sales?
It tends to lift average order value and reduce checkout abandonment, particularly on baskets above roughly £50, because splitting the payment lowers the perceived price at the decision point. The exact uplift depends on your price points and audience, so treat provider-quoted figures as best-case averages rather than guarantees.
Is buy-now-pay-later regulated in the UK?
Historically most interest-free BNPL sat outside FCA consumer-credit rules, but the government has confirmed it is bringing BNPL into regulation, with stronger affordability checks, clearer information, and proper complaints routes expected. Most obligations fall on the provider, but it affects how you can promote BNPL. Check GOV.UK or the FCA for the current position.
How do returns work with a BNPL order?
Refunds flow back through the BNPL provider so the customer's instalment schedule is cancelled or adjusted, rather than refunding the customer's card directly. It works reliably but adds a step, so keep your returns policy clear and make sure your process routes BNPL refunds correctly to avoid customers being billed for goods they've sent back.