Flexible finance is redefining the checkout experience for UK shoppers and businesses with consumers increasingly looking for payment flexibility, according to data from Lloyds Merchant Services.

Research of 2,000 shoppers and 150 retailers showed nearly two thirds (61%) of consumers are more likely to shop with a retailer offering Buy Now Pay Later (BNPL), rising to 63% for point-of-sale (POS) finance. Half (50%) are comfortable using BNPL for mid-ticket purchases between £100 and £500, showing appetite now extends beyond low-value transactions.

Consumers cited cash flow management as the primary motivator when using either BNPL or POS finance, showing these products are becoming part of everyday financial planning. Trust also matters, with 37% saying they would be more likely to use instalment products if integrated directly with their bank.

Merchants responding to demand

Merchants are taking notice of these changing preferences. 84% say they are seeing growing demand for BNPL from customers, and 87% say the same for POS finance. Flexible finance is no longer optional, with 98% of businesses citing it as important to their growth strategy.

Those that have adopted embedded lending are seeing clear benefits. 62% report higher average order values when offering BNPL and 54% see higher repeat business with POS Finance, demonstrating the commercial impact of providing finance at the checkout.

Melinda Roylett, Managing Director at Lloyds Merchant Services, commented: “With adopters more likely to buy from retailers offering instalment options, this is no longer a nice-to-have, it is vital to growth. Cash management is the number one reason people choose embedded lending, and we see this trend growing as households look for more options to support their spending.”

Preparing for regulation

With new BNPL rules due to come into effect in 2026, the research also found that 97% of businesses are already thinking ahead about how regulatory change will affect the purchase experience that they offer. Recognising this, the report also includes practical guidance to help merchants embed finance responsibly; from choosing trusted partners to ensuring clear and transparent communication at checkout.

“The way people pay is evolving quickly, and merchants who stay ahead of the curve will benefit most. Embedding finance responsibly at checkout gives customers the control they want while helping businesses boost loyalty and growth,” added Roylett.