The Best Buy Now Pay Later Apps for Shopify in the UK

Buy now pay later has become part of the checkout for many UK ecommerce stores. A customer chooses a product, splits the cost across several payments and usually gets it straight away, while you are paid by the BNPL provider, less its fee, and the provider manages the repayments. For a Shopify merchant, the question is not whether customers like it, but whether the extra conversion or order value covers higher fees, another provider, extra refund admin, compliance and potentially larger returns.

The UK picture changed in 2026. The FCA began regulating third party Deferred Payment Credit, the interest free BNPL used at most ecommerce checkouts, on 15 July 2026, and Shop Pay Installments is now available to eligible UK Shopify merchants alongside Klarna, Clearpay and PayPal Pay in 3. This guide compares all four from a UK Shopify merchant's point of view, with fees, availability and rules checked on 1 October 2026.

Key Takeaways

• The main BNPL options for UK Shopify stores are Klarna, Clearpay, PayPal Pay in 3 and Shop Pay Installments.
• Klarna now runs inside Shopify Payments at 4.99% plus 30p on Basic, Grow and Advanced; Clearpay typically charges 6% plus 30p plus VAT on the fee; PayPal Pay Later costs 3.90% plus 30p from 1 October 2026.
• When we added Klarna for a client selling high value wedding dresses, conversion rate rose by 23%.
• BNPL usually costs two to three times a normal card payment, and the fees are generally not returned when you refund an order, so test it against your margins and return rate.
• The provider carries the customer's repayment risk, but you still handle fulfilment, returns and product disputes.
• Since 15 July 2026, third party BNPL lenders are FCA regulated; offering BNPL at checkout is exempt broking, but your adverts must still show it is credit and never sell borrowing as a fix for money worries.

Quick Answer

The main buy now pay later options for UK Shopify stores are Klarna, Clearpay, PayPal Pay in 3 and Shop Pay Installments. Klarna can be switched on inside Shopify Payments and costs 4.99% plus 30p on Basic, Grow and Advanced; Clearpay uses a Shopify payment app and typically costs 6% plus 30p plus VAT on the fee; PayPal Pay in 3 comes with PayPal Checkout at 3.90% plus 30p from 1 October 2026; and Shop Pay Installments shows your rate inside Shopify admin. In every case the customer repays the provider while you are paid upfront, and BNPL works best on higher value orders, as our wedding dress client's 23% conversion lift showed.

Table of Contents

• How Does Buy Now Pay Later Work for Merchants?
• Which BNPL Options Work With Shopify in the UK?
• What Does Each Provider Charge Merchants?
• How Do You Add BNPL to Your Shopify Checkout?
• Does BNPL Increase Order Value and Conversion?
• What Happens With Returns and Refunds?
• What Are the UK Rules on Buy Now Pay Later?
• Is BNPL Right for Your Store?
• Why Matters Perspective
• Frequently Asked Questions
• Final Thoughts
• Related Articles

How Does Buy Now Pay Later Work for Merchants?

BNPL separates the customer's payment schedule from your need to be paid. The customer picks a BNPL option at checkout, the provider checks eligibility and approves it, you receive the order, the provider pays you less its fee, and the customer repays the provider. You do not wait for the second, third or fourth instalment: Klarna funds arrive in your Shopify Payments payout, PayPal pays Pay in 3 orders in full, Clearpay settles the purchase amount less fees, and Affirm collects Shop Pay Installments repayments without exposing you if the shopper stops paying.

That transfer of credit risk is why BNPL fees are higher than card fees, but it does not remove every risk: you still own refunds, returns, fulfilment, product disputes, fraud controls and customer service, so a customer who misses an instalment is the lender's problem, while one who says the parcel never arrived can still be yours. On a £100 order, a domestic card on Shopify Basic costs about £2.25 at 2% plus 25p, against £5.29 for Klarna, £4.20 for PayPal Pay Later and £7.56 for Clearpay at its typical rate including VAT on the fee, so BNPL has to earn its extra cost.

Which BNPL Options Work With Shopify in the UK?

Klarna: the simplest Shopify Payments option

Klarna is now a local payment method inside Shopify Payments in the UK, so you no longer need a separate Klarna gateway. UK shoppers can be offered Pay in 30 days, Pay in full or Pay in 3, depending on store location, customer location and order history, and the money lands in your next Shopify Payments payout, keeping reporting in one place. It is also available to eligible customers in several European markets. We look at Klarna first for stores already on Shopify Payments, with customers who expect it and order values high enough for instalments to matter: when we added Klarna for a client selling high value wedding dresses, conversion rate rose by 23%.

Clearpay: strong recognition and Pay in 4

Clearpay splits purchases into four interest free instalments over six weeks and connects through its own Shopify payment app: you need an approved merchant account, a UK store address and GBP as your store currency, then you install the app, connect your Business Hub account and activate it. Clearpay also runs a shopping app that can send discovery traffic, says it has around 3.5 million active British customers and markets strongly to fashion, beauty and lifestyle brands, though those are its own figures. It is worth testing where your audience already asks for it, but at a typical 6% plus 30p plus VAT on the fee, it is the most expensive option here.

PayPal Pay in 3: easiest if customers use PayPal

PayPal Pay in 3 lets eligible UK shoppers split purchases of £20 to £3,000 into three interest free payments, the first at purchase and two monthly, and it is included with PayPal Checkout, which Shopify supports through PayPal Express Checkout, with no separate setup charge. It makes most sense when PayPal is already a big share of your checkout and customers trust it, though shoppers may see PayPal as a wallet rather than a BNPL option, so use PayPal's dynamic messaging earlier in the journey.

Shop Pay Installments: now available in the UK

The biggest change to older comparisons is that Shop Pay Installments now reaches eligible UK stores with a UK business entity, Shopify Payments, Shop Pay and GBP selling and payout currencies. Eligible orders run from £50 to £30,000, with three interest free monthly payments for orders from £50 to £999.99 and longer, sometimes interest bearing, plans beyond that, provided in partnership with Affirm. Its advantage is that instalments live inside the Shop Pay checkout, with funds paid upfront; its drawback is that Shopify does not publish one UK rate, saying only that the fee is higher than standard Shopify Payments, so check your rate under Settings, Payments, Shopify Payments, Manage payment methods, View payment rates.

What Does Each Provider Charge Merchants?

Once the customer experience looks similar, merchant fees decide it:

Shopify's pricing page lists the same Klarna rate on Basic, Grow and Advanced, so upgrading lowers your card fees but not Klarna's, and a lower 3.79% plus 30p on Plus. Clearpay's own example of a £100 order deducts £6, a 30p administration fee and £1.26 VAT, settling £92.44, and it says contracts range from 6% to 8%. PayPal changed its UK Pay Later pricing on 1 October 2026 to 3.90% plus the fixed fee, currently 30p for GBP, so included with PayPal Checkout means no separate subscription, not a free transaction. Check your Shop Pay Installments rate before steering much volume towards it, because BNPL should be judged as a conversion investment, not just another payment icon.

How Do You Add BNPL to Your Shopify Checkout?

For Klarna on an eligible UK Shopify Payments store, go to Settings, then Payments, choose Manage under Shopify Payments, select Klarna under Payment methods and save; some accounts have it switched on already. Clearpay needs an approved merchant account first, then you install its Shopify payment app, sign in to the Business Hub, connect the account and activate it, with your Shopify address and GBP currency matching the UK account. PayPal Pay in 3 appears to eligible customers once PayPal Express Checkout is fully set up, with no extra activation, and Shop Pay Installments is activated from Shopify Payments settings once your store qualifies.

Do not hide BNPL until checkout. If instalments help someone afford a purchase, tell them on the product page, cart and promotional pages, not just at the final step, using each provider's approved messaging, instalment examples and disclosures rather than your own casual credit claims. Shopify, Klarna, Clearpay and PayPal all supply on site messaging for exactly this.

Does BNPL Increase Order Value and Conversion?

The providers say it can, and the important word is can. Klarna claims an average 20% higher conversion, 40% higher order value and 46% higher purchase frequency, while noting results vary; Clearpay advertises a 36% AOV increase on one page and 25% on another, from different datasets; PayPal reports a BT Shop case where Pay Later orders averaged 321% more than standard PayPal orders; and Shopify says one in four Shop Pay Installments merchants see a 50% AOV increase and 28% fewer abandoned carts after switching from another provider. All are the providers' own claims, not forecasts for your store.

Our own evidence points the same way for the right products: when we added Klarna for a client selling high value wedding dresses, conversion rate rose by 23%, because spreading a large, considered purchase changed whether people bought at all. To judge it on your store, compare overall and checkout conversion, average order value, BNPL order value, gross and contribution margin, payment fees, refund rate and value, repeat purchasing and new customer rate. A BNPL order averaging £100 against a normal £80 looks better, but it must leave more contribution after product cost, fulfilment, the higher fee and any extra returns; see our guide to increasing Shopify conversions.

What Happens With Returns and Refunds?

BNPL does not replace your returns policy: the customer returns the product to you, you refund through Shopify or the payment system, and the provider adjusts their repayments. The cost catch is that the merchant fee usually stays with you. Klarna refunds through Shopify can be processed for up to 180 days, but the Shopify Payments fee is not refunded; Clearpay tells Shopify merchants to refund through the store and states its fees are non refundable; PayPal charges nothing to issue a refund but keeps the original transaction fees; and Shop Pay Installments refunds are deducted from your next Shopify Payments payout while Affirm adjusts the plan.

There is no reliable universal figure for whether BNPL increases returns, because category, policy, fit, price and traffic source all matter, although larger baskets in categories such as fashion can change behaviour. Measure your BNPL return rate against card and wallet orders, and compare the value returned as well as the rate, because 10% returns on £150 baskets is a different problem from 10% on £40 ones.

What Are the UK Rules on Buy Now Pay Later?

The FCA began regulating Deferred Payment Credit on 15 July 2026: interest free credit repaid in 12 or fewer instalments within 12 months, where a third party lender finances goods from a merchant. Lenders now need FCA authorisation or temporary permission and must carry out proportionate affordability checks, give clearer information, support customers in financial difficulty and let customers take complaints to the Financial Ombudsman Service. Crucially for retailers, the FCA says broking regulated DPC agreements is exempt, so offering a third party BNPL option at checkout does not make you an authorised credit broker, although lending yourself or other credit activity would need specific advice.

Advertising still needs care. ASA guidance says delayed payment adverts should make clear the service is credit, and FCA rules require financial promotions to be clear, fair and not misleading. In March 2026, the ASA upheld a complaint against a Fragrance Shop Facebook ad that urged shoppers, why wait, and promised a stress free Christmas with BNPL, ruling that it irresponsibly encouraged credit for non essential spending. So prefer wording such as Pay in 3 interest free instalments with Klarna, eligibility and terms apply, never present borrowing as the answer to a lack of money, and use current provider approved messaging rather than copying old disclosures. This is general information, not legal advice.

Is BNPL Right for Your Store?

Start with the economics. BNPL is easier to justify as purchase consideration rises: a £300 item, or a wedding dress, gives a clear reason to spread payment, while on a £12 item the higher fee can outweigh the flexibility. Margin matters too: on a £100 order with £15 of contribution before payment fees, a £7.56 Clearpay charge eats half of it, while with £60 of contribution the same fee is easy to absorb.

Then look at demand: customer service requests for Klarna or Clearpay, abandoned checkout feedback, competitors' checkouts, payment method reports and category norms. Clearpay leans towards younger fashion and lifestyle shoppers, PayPal suits stores where PayPal is already popular, Klarna has wide UK recognition and Shop Pay Installments suits stores where many customers already use Shop Pay. Confirm your products are eligible, then test one provider long enough to see adoption, conversion, order value, cost, returns and contribution before adding a second for a genuinely different group of customers.

Why Matters Perspective

Payment options are part of CRO because checkout friction can stop someone who had already decided to buy, but the goal is not to fill the checkout with every logo available. We evaluate BNPL in three steps: is there a customer problem, such as baskets that feel expensive or customers asking for Klarna; does the extra revenue cover the cost once product cost, fulfilment, payment fees and refunds come out; and does the experience improve, with reliable checkout display, accurate product page messaging, smooth mobile use and clean refunds?

Our wedding dress client is a clear case where all three held: high, considered purchases, customers who wanted to spread the cost and a 23% rise in conversion rate once Klarna went live. On a low price, low margin range, the same logo could simply make orders you would have won anyway more expensive. Our Shopify CRO service looks at payments alongside product pages, cart, checkout, mobile UX and trust, and treats BNPL like any other conversion investment: measured, not assumed.

Frequently Asked Questions

Which buy now pay later apps work with Shopify?

UK Shopify merchants can offer Klarna, Clearpay, PayPal Pay in 3 and, for eligible stores, Shop Pay Installments. Klarna and Shop Pay Installments run through Shopify Payments, Clearpay uses its own payment app and PayPal Pay in 3 comes with PayPal Checkout.

How much does Klarna charge merchants?

Through Shopify Payments in the UK, Klarna costs 4.99% plus 30p per transaction on Basic, Grow and Advanced, and Shopify's pricing page lists 3.79% plus 30p on Plus. The fee is not refunded if you refund a Klarna order.

Is Shop Pay Installments available in the UK?

Yes, for stores with a UK business entity, Shopify Payments, Shop Pay and GBP selling and payout currencies. Eligible orders range from £50 to £30,000, and your merchant rate is shown in your Shopify admin.

Does BNPL increase conversion and order value?

It can. When we added Klarna for a client selling high value wedding dresses, conversion rate rose by 23%. Provider figures are marketing claims, so measure conversion, order value, fees, margin and returns on your own store.

Can I offer Clearpay on Shopify?

Yes. You need an approved Clearpay merchant account, a UK store address and GBP as your store currency, then you install and activate the Clearpay payment app. Typical UK fees are 6% plus 30p plus VAT on the fee.

Is buy now pay later regulated in the UK?

Yes. Third party Deferred Payment Credit has been regulated by the FCA since 15 July 2026, with affordability and consumer protection rules for lenders. Broking these agreements is exempt, so offering BNPL at checkout does not make a retailer a credit broker.

Who pays if a BNPL customer does not pay?

With mainstream providers, the lender carries the repayment risk once an approved order completes, so you are paid without waiting for every instalment. You still handle fulfilment, returns and product disputes.

Final Thoughts

Do not start by adding every provider. If you use Shopify Payments, Klarna is the easiest to test because it sits inside it; if many customers use Shop Pay, check your eligibility and rate for Shop Pay Installments; if customers keep asking for Clearpay, especially in fashion, beauty or lifestyle, its higher fee may still pay for genuinely extra orders; and if PayPal already performs well, Pay in 3 adds instalments within a relationship you have.

Then measure BNPL adoption, checkout conversion, order value, transaction cost, gross and contribution margin, return rate and repeat purchasing. The question is not whether BNPL increases sales, but whether it increases profitable sales after the extra cost and returns. For help analysing your checkout and payment options, see our CRO agency page, and for the wider payments picture, our guide to Shopify Payments in the UK.

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