The rise of flexible payments for the UK eCommerce industry

The commerce industry is one of the most innovative around.

Brands in this area are often at the forefront of trends. Whether that be automation, personalisation, AI, AR, or data management.

One of the latest trends which is growing rapidly are flexible payments.

Less of a nice-to-have, flexible payments are fast proving to be a necessity for commerce brands and consumers alike.

Read on to understand what we mean by flexible payments, how flexible payments are performing in 2021, and how your commerce brand could benefit.

What are flexible payments?

Flexible payments offer consumers the option to “buy now pay later” (BNPL) as well as pay in instalments.

This is comparable to credit cards. However, it doesn’t involve the high-interest rates that credit cards come with.

Suppliers that offer flexible payments tend to do the hard work when it comes to collecting payment. This means that brands don’t have to deal with the challenges of fraud or high risk. Instead, they get paid upfront, and the flexible payment provider gets paid later.

With regards to costs, providers of flexible payments will take a small percentage of every BNPL sale. These costs will differ between providers, so for businesses considering flexible payments, it’s worth doing your homework when choosing.

Flexible payments in 2021

Flexible and BNPL models have taken the commerce world by storm over the past few years.

In fact, 9.5 million British consumers now report that they avoid buying from retailers that don’t offer flexible payment options. This highlights that flexible payments are fast becoming less of a nice to have, and more of an essential.

To put that in perspective, 27% of British consumers have now used a flexible payment service. And perhaps unsurprisingly, over half of BNPL users used this service more over the pandemic. Suggesting the flexible payment model is increasing in popularity due to Covid-19, with online shopping and financial challenges.

Furthermore, an enormous 8.6 million British consumers plan to use flexible payment options in the future. Suggesting the model is showing no signs of slowing down in popularity.

But, who are these flexible payment users?

Research shows that younger generations are more likely to use this model. Notably millennials, with 41% stating that they now use flexible payment options.

Flexible payments for UK eCommerce

Image Source – Forbes

More specifically, males seem to utilise flexible payment more than females. With 41% of males reporting they use the service compared to 33% of females.

And in terms of location? London is the front runner in flexible payment usage, with almost half of Londoners claiming to use the service. Compared to the East of England who have the lowest uptake at just 31%.

For those new to flexible payment options, you may be wondering what brands actually offer this service.

In the UK, Klarna clearly leads the way with almost a million app downloads. However, many Brits may be more familiar with My Argos Card, which remains one of the top flexible payment options available today.

Flexible payments for UK eCommerce Brands

Image Source –

Benefits to commerce

So why would businesses consider offering flexible payments? Here are just some of the benefits:

Increased conversions

Research shows that 55% of abandoned baskets online are because the total cost of purchase is too high. This could be due to the customer waiting on payday, having a particularly expensive month, or simply just struggling to mentally swallow the cost.

Flexible payments can make these purchases more manageable by spreading out the costs over a less immediate period of time.

This approach can even increase the average size of online shopping baskets by 20–30%.

Reach new customers

Flexible payment options offer a point of differentiation when it comes to commerce.

With an increasing amount of consumers demanding more flexible payment, this will offer brands an opportunity to stand out from their competitors. Whereas previously, they may have blended into the background.

This is particularly relevant for those brands whose audiences are older generations. As flexible payments will make them more attractive to younger consumers. Especially millennials, who are expected to be the main drivers of eCommerce for the foreseeable

Improve your customers’ experiences

As we’ve covered, millennials are some of the biggest users of flexible payments. And for many brands today, they are their biggest audience.

Millennials demand a personalised, uncomplicated commerce experience that is on their own terms.

Flexible payments provide them with exactly that. They have more control over when money leaves their account, which is particularly useful if they want to return items. And the process is fuss-free.

Grow customer loyalty

66% of consumers check return policies before making a purchase. And more than half of online shoppers will abandon a purchase if the returns procedure is too strict.

By offering flexible payment options, brands are giving consumers more control and reassurance over their payments and returns process. Meaning that customers will turn to a brand that meets these needs, over one that is too restrictive.

Meet the author

Komal Helyer

VP Marketing