Is the UK Seeing a Rise in BNPL Services?

After establishing itself as a flexible finance provider offering pay in three to US Google Pay consumers, Klarna has announced it will also offer three interest-free installments at checkout for Google Pay UK users via a new integration. 

Offering pay in three with Google Pay UK further deepens Klarna’s reputation as one of the largest buy-now-pay-later (BNPL) providers. 

Working inside the Klarna app, consumers will have the ability to manage and control their purchases, in addition to tracking deliveries, handling returns and managing repayments. 

Integrating Klarna into Google Pay UK means that more UK users can access flexible payment options. 

Raji Behal, Head of Western and Southern Europe, UK & Ireland at Klarna, comments:  “We’re really excited to bring Klarna’s fair, flexible and interest-free payment options to Google Pay users. This is a big moment for us and a major step towards our goal of being available at every checkout, everywhere. 

“Together with Google, we’re making it easier than ever for millions of shoppers to choose Klarna and pay in a smarter, more transparent way – all from their phone.”

The announcement signals that Klarna’s mission to be “available at every checkout” is gathering momentum as BNPL services become more popular for consumers.

What is the FCA's stance on BNPL? 

As the use of BNPL increases, regulatory bodies have improved protections to consumers as a response.

The announcement to integrate Klarna's BNPL services to UK Google Pay customers comes shortly after the Financial Conduct Authority (FCA) released an update about the future of BNPL protections. 

BNPL has moved under the FCA’s regulation, meaning that users of BNPL services will face better protections as of July 15, 2026. The FCA says the protections are there to help consumers “navigate their financial lives” with appropriate support, aimed at users who use the service repeatedly and “may not be able to afford it”. 

UK Finance’s ‘BNPL trends in the UK’ 2025 report, 25% of UK adults used BNPL at least once in 2024, a rise from only 14% of UK adults using it in 2023. The average amount of BNPL spend in the UK is currently £114 (US$155.6) according to the report. 

Consumers will soon benefit from new protections such as clearer information about their agreement, including dates, timelines, amounts and what happens in case of a missed payment. Additionally, there will be affordability checks from lenders to ensure that borrowers are able to repay what they have taken out. 

Support from the FCA will be offered to customers who are in financial hardship, including pointing them to the direction of free debt advice where appropriate. Consumers will also have access to the Financial Ombudsman Service in case of a complaint. 

The Payment Trends Report 2025 from the Payments Association states that in 2025, the market value for BNPL was US$560bn. 

Lenders must register with the FCA before they can become authorised BNPL lenders, and the FCA will support them also with pre-application to ensure firms’ readiness. 

Sarah Pritchard, Deputy CEO at the FCA, notes: “We want the Buy Now Pay Later sector to thrive – it provides an important source of credit to many – and we will continue to support firms who want to develop innovative new products. 

“But crucially, no one should be lent to if they're unable to repay, because that could worsen their financial situation. Now Parliament has given us the powers, we’re putting in place proportionate protections for the 11 million people who use it.”

Who is using BNPL? 

Contradicting to the assumption that BNPL users are often low-income, the UK Finance report sets out to put that myth to rest. 

BNPL is used, on average, among consumers with a significantly higher income bracket, with 30% of BNPL users earning between £25,000 and £50,000 (US$34128 and US$68257, respectively). Additionally, 32% of BNPL users have an income of over £50,000, according to the report.