In-store BNPL: what does it actually mean?
In-store instalment payments, also known as Buy Now Pay Later (BNPL), allow customers to split a purchase into multiple scheduled payments directly in your shop. For a long time, these solutions were mainly associated with ecommerce. Today, they have expanded into physical retail thanks to modern payment terminals and new integration models.
In practice, the customer shops as usual, then chooses to pay in 2, 3 or 4 instalments, either interest-free or with fees depending on the provider. Approval is usually instant. You, as the merchant, get paid according to the agreed settlement terms with your partner (for example Klarna or Floa), while the customer repays over time based on a defined schedule.
This model responds to growing expectations from consumers who want tighter budget control while still purchasing higher-value products. According to UK Finance's Payment Markets Report 2025, around 25% of UK adults used Buy Now Pay Later services for purchases in 2024, up from 14% the previous year, with the trend particularly strong among younger consumers.
How does BNPL in store work?
Fast integration, without changing everything
Rolling out BNPL in store does not require a full technology overhaul. Most solutions rely on your existing payment terminal, or on a dedicated mobile application used at checkout. Your payment service provider typically supports the integration process, which can often be completed within a few days.
Behind the scenes, the infrastructure is built on partnerships with consumer credit specialists such as Klarna, Floa or PayPal Pay in 4. These partners handle eligibility checks, approval decisions and instalment collection, so merchants do not have to manage credit administration.
The in-store customer journey
The experience is designed to stay quick and intuitive. Once the purchase amount is entered into the terminal, the customer selects the instalment option. They provide a few personal details, such as phone number, email and bank details, either directly on the terminal or via their smartphone using a QR code.
An automated assessment checks eligibility in seconds. If approved, the customer confirms the schedule and receives immediate confirmation by email or SMS. The whole process typically takes under two minutes, which is close to the time needed for a standard payment.
This speed matters. Customers do not feel friction, queues do not grow, and the shopping experience remains smooth, which is critical for customer satisfaction.
What it means for cash flow
From a cash flow perspective, the model is reassuring. In most cases, the merchant receives the full amount of the sale, minus fees, within 24 to 48 hours. The instalment provider assumes the risk of non-payment and manages the relationship with the customer for the remaining instalments.
Fees depend on the partner and transaction volumes, often ranging from 3% to 5% of the purchase amount. For retailers, this cost should be viewed as a commercial investment: it can increase basket size, improve conversion and attract new customers while keeping settlement secure.
Key benefits for retailers
Higher conversion and larger baskets
The most direct impact is on sales performance. Customers offered instalment payments tend to spend more than those who pay upfront. Splitting a price reduces the psychological barrier and makes a purchase feel more accessible.
A simple example illustrates the effect. A customer hesitates to spend £300 on an item. With a three-payment plan, the cost becomes £100 per month. Something that felt expensive can suddenly feel manageable. What might have become abandonment turns into a completed sale.
This flexibility can also increase add-on purchases. Customers are more likely to include an extra item when they know the payment can be spread out.
Attracting and retaining customers
Offering instalments in-store is a differentiator. In competitive retail environments, stores with buy now pay later options stand out, especially among younger customers who already use these solutions online.
For shoppers aged 25 to 40, BNPL has become a familiar ecommerce habit. Bringing the same flexibility into physical retail helps create continuity between digital and in-store experiences, which is a core omnichannel expectation.
It can also strengthen loyalty. Customers who have a smooth instalment experience are more likely to return, because they associate the brand with a modern, comfortable way to pay.
Secure settlement, without added merchant risk
Contrary to some assumptions, in-store BNPL does not expose merchants to additional risk. In fact, it often reduces operational burden. Once the customer is approved, the provider pays the merchant and then collects instalments directly from the customer.
If a customer fails to pay later instalments, the provider manages the situation. This means merchants can focus on sales and service rather than payment follow-up.
One point is worth noting. Like any payment method, deferred payment providers can adjust acceptance rules if fraud attempts rise, particularly in categories with high resale value. In such cases, they may temporarily restrict BNPL for certain baskets or product types.
Best practices to implement BNPL in store
Choosing the right partner is the first step. Retailers should prioritise a payment service provider that offers native BNPL integration and reliable technical support, as this reduces friction and improves day-to-day management. It is also important to compare BNPL partners, because acceptance criteria, approved amounts and scoring models can vary significantly between providers.
Team readiness is just as critical. Store staff need to understand how the option works so they can reassure customers and keep checkout smooth. Practical training works best, focusing on how to trigger the option, how to handle edge cases, and how to explain the value in simple terms.
Visibility in-store plays a major role in adoption. Customers should know instalment payments are available before they reach the checkout. Clear signage at the entrance and near the till helps, and staff should feel comfortable mentioning the option for higher-value purchases. Extending communication to digital channels such as your website, social media and newsletters also builds awareness and trust.
Finally, retailers should adapt the offer to their sector. BNPL tends to deliver the strongest impact where average basket values are higher, such as home equipment, appliances, fashion, jewellery and sports. Many merchants set a minimum purchase threshold, often between £50 and £100, to ensure the economics remain attractive given the fees. For very low average baskets, other payment options may offer better value.
Measuring and improving performance
Like any commercial initiative, in-store BNPL should be tracked and optimised. Monitor usage rate, changes in average order value, overall conversion and return on investment. Your payment provider should offer clear dashboards and accessible transaction data so you can refine your strategy, adjust eligibility thresholds and reinforce communication where needed.
Feedback from customers and store teams is also valuable. Their day-to-day observations help identify friction points and improve the experience continuously.
In-store instalments: a long-term shift in retail
In-store instalment payments are not a passing trend. They reflect a broader change in consumer behaviour, where flexibility and budget control have become key decision criteria.
Customers who are used to these options online now expect the same convenience in physical shops. Not offering it can push shoppers toward more innovative competitors or ecommerce-first retailers.
Beyond pure conversion, instalment payments can strengthen the customer relationship. They signal that your brand understands customers’ needs and keeps pace with evolving expectations.
With a broad payment catalogue and proven expertise, Monext supports retailers in launching BNPL in store with the right setup for their business, while ensuring security and performance.
