Fintech is creating new opportunities for British businesses

By Richard Bayer
Rich Bayer, UK & EU Country Manager at Clearpay, explores how fintech like Buy Now, Pay Later (BNPL) is building new opportunities for British retailers


With belts tightening and prices rising, consumers are scrutinising household expenditures, and the festive season is no exception. Clearpay’s recent Festive Forecast research highlights that almost half of shoppers (48%) are cutting back on general purchases to help make ends meet this season. With sales volumes still below pre-pandemic levels, British retail is feeling the impact.

There have been a number of reports in the media about how consumers are using short-term, interest-free payment alternatives like BNPL to manage their spending, but other benefits of BNPL are often overlooked. 

At current rates of growth, BNPL could account for 10% of all UK e-commerce spending by 2024 and it’s clear why this payment method is becoming increasingly popular. A win-win for both consumers and retailers, BNPL offers a budgeting tool for consumers with inbuilt protections to safeguard them from overspending. Its payment flexibility means they can avoid using credit cards that often come with interest and the risk of revolving debt. 

With two in five shoppers planning to spend less this Christmas season, and one in five looking to purchase less expensive gifts, every customer counts1. Ensuring the protection and growth of British retailers is crucial as they grapple with digitisation and the changing face of the high street, whilst staring down the barrel of a tough fiscal year.

Innovative fintech that is attuned to how next-generation consumers prefer to shop, is one-way businesses are looking to drive revenue through Christmas sales and future-proof themselves next year and onwards. Seven in ten Brits would most like to receive fashion or clothes this holiday season1, which explains why retailers from household names like Boden, M&S, and Footasylum to small independents and sole traders, offer BNPL to get ahead of the curve.

Customer experience: It’s about choice, transparency, and control

The credit card model of profiting from customers falling into debt has been exposed and BNPL demonstrates that it’s possible to have a deferred payments model that is not detrimental to consumers. It’s clearly a popular option - since January 2020 alone, consumer spending on BNPL in the UK has grown by 348%. 

While BNPL currently makes up a small portion of overall UK payments, it is growing fast. In online fashion retail, BNPL already makes up 9% of all transactions and, more broadly, nearly one in 10 (9%) plan to sign up to a BNPL service like Clearpay to manage their finances this Christmas1. It is an increasingly important element within the changing retail payments ecosystem. 

Embedded finance: A win-win for retailers

BNPL provides numerous benefits for retailers. Offering customers flexible payment options that allow them to spread payments over a couple of pay cheques helps merchants get new customers through the door.

On top of being a payment platform, some BNPLs like Clearpay are a marketing channel, connecting merchants to new audiences. We’ve seen this in action, as we refer around one million customers to merchants globally every day. What’s more, Clearpay found that 17% of Gen Z and Millennial shoppers would be prompted to buy a Christmas gift if they noticed that the store offered a BNPL service1.

The right BNPL provider also offers reduced fraud risk, increased purchase frequency, lower return rates, and a customer-first payment solution. This is particularly useful for smaller merchants who don’t have the resources to compete with the security, price points, or resources of competitors. For them, a BNPL company can be more than just a payments provider, it is a partner that helps a small business grow.

BNPL: A true first-mover advantage

SMB retail sales growth was over 2.5 times higher than large retailers between 2019 and 2021. Small merchants have the chance to build momentum and gain an edge over the competition by embracing embedded finance and bringing payment options in line with larger merchants. 

In this age of embedded finance, consumers now expect the same flexibility and experience whether they're making purchases online or in-store, and retailers need to integrate the right payments and technology services to make the process seamless for consumers – wherever they shop. 

BNPL helps retailers grow check-out conversion and its impact is set to increase with the continuing rollout of BNPL in physical stores. In 2021, at Clearpay, we generated £739 million in incremental sales for UK merchants in 2021 and delivered £403 million in net economic benefits3 through improved revenue streams, delivering higher average order values and increased sales.  

With government regulation of BNPL coming, the best outcome will protect consumers, while still allowing for continued innovation. By working together, industry and government have the opportunity to regulate the sector in a way that allows businesses, payment providers, and consumers alike to benefit.  

For a technology that is less than a decade old, we have seen BNPL disrupt the traditional payments sector. New payment methods are creating real growth opportunities for British retailers while also helping consumers manage their spending. This win-win for both the shopper and the shopkeeper will help see them through the cost-of-living crisis and beyond.


About the author: Rich Bayer, UK & EU Country Manager at Clearpay (known as Afterpay in Australia, the US and Canada)

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