There are just weeks to go until the FCA Deferred Payment Credit or BNPL (Buy Now Pay Later) regulation comes into force. New PayPal research reveals UK businesses are optimistic about the impact of the changes. Sixty-four percent believe regulation will help their business as they think it will improve consumer trust (59%) and transparency (58%).
PayPal’s survey of 1,000 British business owners and representatives found that 49% believe the regulation will help them create a more sustainable long-term business model.
In fact, 23% plan to increase their BNPL offering after implementation. Respondents believe the changes will provide a better quality of customers (20%) due to increased consumer confidence in these products.
This is also expected to help improve conversion and sales (18%). Yet some businesses remain concerned about affordability checks reducing conversion rates (19%), increased legal risk (18%) and compliance costs (16%).
For UK businesses, working with a trusted provider will be key to benefiting from the expected shift in consumer attitudes. Where BNPL is offered through a third-party provider such as PayPal, responsibility for complying with the new regulation primarily sits with PayPal as the lender, rather than with the merchant.
An opportunity for merchants
Tamer El-Emary, PayPal General Manager UK, said, “For businesses providing Pay in 3, there is no disruption and no action required. We have long shared our support for proportionate BNPL regulation. Like the British businesses we have heard from, we believe it will help strengthen confidence in the payment category.
“At the same time, supporting long-term, sustainable growth. We are well prepared for the new requirements, with many of them reflecting practices we’ve had in place for some time. So, we don’t expect to see any changes in our conversion rates.”
Tamer also said, “It’s a great opportunity for merchants. Our Pay in 3 service has a 129% higher average order value than standard PayPal transactions. There’s a payment option that can help drive growth without adding credit risk to your business.”
Trust is an important factor in how merchants evaluate payment providers. Sixty-five percent say trust and brand reputation matter most when choosing a BNPL provider. The research also found:
- 65% want clearer guidance on regulation and compliance from providers.
- 51% want support updating checkout and customer journeys.
- 49% want tools to help communicate BNPL responsibly to customers.
Two companies, Pramworld and Farrar & Tanner, provided their opinions in the report after working with PayPal and its solutions.
This comes after other research released last month by Commerce, a data-centric provider of an open, AI-driven commerce ecosystem and PayPal. It shows that there is strong consumer interest in agentic shopping experiences. It also indicates a clear demand for safeguards that keep consumers in control of purchases.
Enterprise Times: What this means for businesses
This research is important because it shows that many UK businesses view BNPL regulation as a positive development rather than simply a compliance burden. The findings suggest that clearer rules could increase consumer trust, improve transparency, and support more sustainable business growth. At the same time, also encouraging some merchants to expand their BNPL offering.
The data highlights practical concerns around affordability checks, legal risk, and compliance costs. It also suggests that businesses will need guidance and support from trusted payment providers.
Overall, the research helps explain how regulation may shape merchant confidence, customer behaviour, and the future growth of BNPL services in the UK.
