New PayPal research reveals businesses see the UK's new BNPL rules as an opportunity to strengthen consumer trust, increase transparency and support long-term growth.
As the UK’s new FCA rules for Deferred Payment Credit (Buy Now, Pay Later) take effect July 15, British businesses aren’t just preparing for regulatory change—they’re seeing opportunity.
New research commissioned by PayPal among 1,000 British business owners and representatives shows merchants believe the new rules will strengthen both consumer confidence and the future of flexible payments.
Key findings include:
- 64% believe the regulation will have a positive impact on their business.
- 59% say it will improve consumer trust.
- 58% believe it will increase transparency.
- 49% think it will help create a more sustainable long-term business model.
- 23% plan to expand their BNPL offering once the new rules take effect.
Trust is the real opportunity
For many businesses, the value of regulation extends beyond compliance. As consumers increasingly expect payment options that are convenient, transparent and backed by trusted brands, clearer rules can help build greater confidence in the category.
That confidence matters. PayPal research found 65% of businesses say trust and brand reputation are among the most important factors when choosing a BNPL provider.
Merchants are also looking for practical support as the new rules come into effect. They told us they want:
- Clearer guidance on regulation and compliance (65%)
- Support updating checkout and customer journeys (51%)
- Tools to help communicate BNPL responsibly to customers (49%)
For businesses using PayPal Pay in 3, the transition is designed to be straightforward. As the lender, PayPal takes on the primary regulatory responsibilities, while merchants should continue ensuring their customer communications and checkout journeys remain clear, fair and not misleading. PayPal has also been working proactively with merchants, including providing dynamic messaging tools that help communicate Pay in 3 clearly at checkout.
Flexible payments continue to drive growth
While trust is becoming increasingly important, the commercial opportunity remains strong.
Internal PayPal data shows Pay in 3 transactions deliver a 129% higher average order value than standard PayPal transactions. Merchants receive full payment upfront while PayPal assumes the credit risk, helping businesses grow without taking on additional lending responsibilities.
For retailers like Pramworld, offering PayPal Pay in 3 has become an important part of serving customers making higher-value purchases.
“We've been working with PayPal for 14 years and have found being able to offer Pay in 3 has made a huge difference to our growth. The regulation will give shoppers added trust and transparency, enabling them to make more confident purchase decisions.”
— David Winstanley, Director, Pramworld
For Farrar & Tanner, flexible payments help customers invest in quality products while giving them confidence at checkout.
“Payment flexibility really helps our customers when buying home or gift items—where they don't want to compromise on price but want to buy a heritage quality item either for themselves or for a loved one. Trust is key in the buying journey. A well-known brand like PayPal already gave our customers confidence in deferring payments, and the regulation will add to that credibility. As a business, offering a flexible payment option that helps our customers, with no friction—and we still get the money upfront—is a no-brainer.”
— Richard Tanner, Chairman, Farrar & Tanner
Looking ahead
“The introduction of proportionate regulation is an important moment for the industry,” says Tamer El-Emary, General Manager, UK at PayPal.
“We've long supported proportionate BNPL regulation because we believe it strengthens confidence in flexible payments while supporting long-term, sustainable growth. For businesses offering Pay in 3, there is no disruption and no action required. We've been preparing for these requirements for some time, and many of them reflect practices we've already had in place.”
As flexible payments continue to evolve, trust will increasingly differentiate the businesses—and the payment providers—that customers choose.
To help merchants prepare, PayPal has created a dedicated BNPL Regulation FAQ with practical guidance on the new rules and what they mean for businesses. Merchants can also learn more about PayPal Pay in 3, including how eligible customers can spread purchases over three interest-free payments while businesses receive full payment upfront and PayPal manages the credit risk.