Welcome to an insightful conversation on the evolving world of Buy Now, Pay Later (BNPL) services in the UK. Today, we’re joined by Zainab Hussain, a seasoned e-commerce strategist with deep expertise in customer engagement and operations management. With BNPL becoming a retail staple and new regulations set to roll out in 2026, Zainab offers a unique perspective on how these changes will shape the landscape for merchants and consumers alike. In this interview, we dive into the motivations behind the UK’s regulatory push, the potential impact of affordability checks on users and merchants, the enduring benefits of BNPL for retailers, and lessons from global markets where BNPL thrives under strict oversight.
What inspired the UK to introduce new BNPL regulations by 2026, in your view?
I think the primary driver behind these regulations is a genuine concern for consumer protection. With BNPL usage skyrocketing—over 11 million UK adults used these services in a single year—there’s been a noticeable uptick in default rates. The government and the Financial Conduct Authority are stepping in to prevent people from falling into unmanageable debt, especially with smaller loans that can add up quickly. But it’s not just about debt; there’s also a push for transparency. Many users don’t fully grasp the terms they’re signing up for, and these rules aim to make the process clearer while promoting responsible lending practices.
How do you think mandatory affordability checks will impact the typical BNPL user’s experience?
For most repeat users, I don’t foresee much disruption. Data shows that around 70% of BNPL customers are making repeat purchases, and they’ve likely already gone through initial checks when setting up their accounts. For them, it’ll be business as usual. However, new users might feel a bit of friction at checkout with these extra steps. It could be a slight annoyance, but if implemented smoothly—say, with pre-approval options or quick digital verifications—I think the impact will be minimal for most.
From a merchant’s standpoint, what makes BNPL such a compelling option to offer at checkout?
Merchants love BNPL because it’s a proven way to drive sales. It significantly boosts average order values—shoppers are more likely to splurge when they can split payments into smaller chunks. Conversion rates also improve since BNPL reduces cart abandonment by making purchases feel more accessible. Another huge perk is that the repayment risk shifts to the BNPL provider. Merchants get paid upfront, regardless of whether the customer pays off their installments, which is a massive relief operationally.
Do you believe the upcoming regulations might cause merchants to reconsider offering BNPL?
I don’t think so, at least not for most. The core benefits—higher order values and better conversion rates—still outweigh the potential downsides. Yes, processing fees of 2-6% could sting if conversion rates dip due to slower checkouts or fewer approvals, but over two-thirds of transactions are expected to go through without issues. That scale keeps BNPL attractive. Merchants might grumble about minor hiccups, but the demand for flexible payments from consumers will likely keep them on board.
How do you see the checkout process being affected by these affordability checks, and what could that mean for sales?
There’s a risk that mandatory checks could slow down the checkout for new users, which might lead to some cart abandonment if the process feels too cumbersome. Speed is everything in e-commerce—a delay of even a few seconds can impact sales. However, if BNPL providers streamline these checks, perhaps by integrating them into existing payment flows or offering pre-approval, the impact could be negligible. Merchants will need to keep an eye on this, but I believe the industry will adapt to minimize friction.
Looking at markets like Turkey and Brazil, where BNPL grows despite strict rules, what lessons can the UK take away?
One big takeaway from Turkey and Brazil is that regulation doesn’t have to kill innovation or demand. In Turkey, for instance, credit card installment transactions have soared even after stricter affordability rules were introduced. The key is integration—BNPL works best when it’s embedded into familiar, trusted payment systems like credit cards, keeping the process fast for repeat users. The UK can learn to balance compliance with convenience, ensuring that new rules don’t bog down the user experience while still protecting consumers.
What is your forecast for the future of BNPL in the UK under this new regulatory framework?
I’m optimistic about BNPL’s trajectory in the UK, even with the 2026 regulations. The demand for flexible payment options isn’t going away—consumers have come to expect it, and merchants rely on it for growth. While there might be some initial bumps, especially for new users navigating affordability checks, I think providers will innovate to keep the process seamless. Drawing from global examples, I expect BNPL to continue scaling, potentially becoming even more integrated into everyday payment systems. It’s not just a trend; it’s becoming a fundamental part of how people shop.
