Retailers offering flexible payment options such as Buy Now, Pay Later (BNPL) and point-of-sale (POS) finance are already seeing tangible commercial benefits, according to new research from Lloyds Merchant Services. The caveat is that customers favour flexible payments offered through their existing bank relationships.
The new research from Lloyds Merchant Services, The Flex Economy: How Buy Now, Pay Later and POS Finance are Shaping the Next Era of Checkout, reveals that merchants adopting flexible finance are significantly outperforming their peers, with 62% reporting higher average order values and 54% experiencing more repeat business interactions.
The findings highlight a shift in how shoppers approach affordability and loyalty in the post-pandemic retail landscape. Rather than treating BNPL as a short-term convenience, many consumers now view it as a budgeting tool that enables more confident purchasing decisions. This evolving behaviour is reflected in the data: six in ten consumers who have used flexible finance say they are more likely to shop with retailers that offer such options, while two-thirds would favour stores providing instalment plans for larger purchases.
Lloyds Merchant Services’ report positions flexible finance as a catalyst for growth and customer engagement. Almost every business surveyed (98%) considers it integral to their long-term strategy, and most are now seeing direct evidence of its impact on conversion rates and brand loyalty. With flexible payment methods increasingly seen as part of a seamless checkout experience rather than an optional extra, their influence on sales and retention is growing steadily across multiple sectors.
Consumer confidence in these models is also maturing. Many shoppers are turning to BNPL and POS finance not out of necessity, but as part of everyday financial management, using instalments to smooth out cash flow and better plan monthly spending. This behaviour is reshaping the traditional notion of credit at checkout, aligning more closely with consumer budgeting habits and lifestyle preferences.
However, the report also notes that trust remains a critical factor in adoption. More than a third of consumers say they would be more inclined to use flexible finance if it were offered through their existing bank, underscoring the importance of reliable and transparent partnerships between financial institutions and retailers.
As the UK moves toward clearer regulation of BNPL, expected to take effect in 2026, almost all businesses surveyed (97%) are already assessing how upcoming changes will affect their checkout processes and customer experience. For most, the goal is not only compliance, but also creating a more integrated and trusted financing ecosystem that supports sustainable retail growth.
The study concludes that flexible finance has evolved beyond a competitive differentiator to become a fundamental part of modern commerce. For retailers, it represents both a revenue driver and a relationship builder, one that aligns customer satisfaction with business success.
