Published: May 2023
Pages: 83
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Point of Sale Finance / Buy Now Pay Later Market Insight Report 2023


This report focuses on the UK market for point of sale, or POS, finance. Also known as retail finance, in-store credit, store instalment credit or Buy Now Pay Later (BNPL), it refers to loans provided by, or on behalf of, a retailer to enable a consumer to make a specific purchase.

This new edition of the report has been updated and extended to take into account recent growth in the market and to revise our market size and growth estimates.

The report quantifies the market size in loans outstanding, new lending and loan provider revenues, historical growth rates and levels of industry profitability. It segments the market between conventional POS finance and BNPL.

Objectives of the report

This report aims to answer a series of questions on the POS finance market:
– How does the market work? What changes have there been recently?
– What would be the impact of an interest rate rise?
– Which types of retailers use it most frequently?
– How does it compare with alternative and substitute forms of finance?
– What role has new technology played in the market?
– What is the market size and historical growth rate, in terms of total loans outstanding, new lending and lender revenues?
– What are the risks to future market growth?
– How does the market compare with those in other countries?
– Who are the main finance providers and principals, which are most widely used by retailers, how have they performed?
– In simple terms, what do they each do, who do they work for and how do they operate?
– What do the leading UK retailers do – to what extent do they use this form of finance, how do usage patterns vary by sector, which providers does each use and what is the extent of churn?

Market background

Unsecured consumer credit for the purchase of specific goods or services can be split between two key segments: Buy Now Pay Later (BNPL) and Point of Sale / Service (POS).
– BNPL: Interest-free split payments for up to around three months, termed Buy Now Pay Later (BNPL) finance. This is a relatively new part of the market having grown rapidly in the past three years.
– POS: Credit agreements typically of 12 months or longer.

It includes purchases of goods from high street stores and online as well as purchases of services from medical, beauty or other providers

Many retailers choose to subsidise the cost of the credit as a promotional expenditure and offer “interest-free credit” or “zero per cent finance”.

It is used by both national retail chains and independent shops, most commonly in the home and furniture, jewellery and electricals sectors.
– Loans are generally set up as personal loans, not secured on the asset and without a lease arrangement.
– Interest-free loans are generally for 3-12 months with an APR of 0% (i.e. no additional fees are charged)
– Charged-for loans are generally for periods of 12-60 months. Where interest is charged, an APR of 15-20% being typical.

Market growth and drivers

The market for POS finance has grown quickly in recent years with total
outstanding lending having reached £12.5bn by the end of 2022.

The latest reported figures for combined revenue of leading lenders was around £1.5bn

It has been driven by trends in a range of demand and supply factors, including:
– Ongoing retail sales growth
– Growth of online sales, where POS penetration increased significantly during the pandemic.
– The rapid expansion of BNPL offers across a wide range of retail sectors that previously did not offer POS
– The overall performance of the economy as a driver of both retail sales and consumer confidence
– Pricing of POS finance loans, particularly the current wide availability of interest-free deals.
– The impact of technology on the market with new apps enabling far quicker decision-making and higher application acceptance rates.
– The impact of regulations on the market, including the need for lenders to take reasonable care to confirm that new lending is affordable.

Competitive landscape

The market consists of retailers, broker platforms and lenders.

In addition to most large retailers in the relevant retail sectors, around 15,000 independent retailers and service providers, including online-only stores, currently offer POS finance.

Our monitoring of POS solutions offered by the largest UK retailers finds frequent changes in both providers and terms of POS solutions being offered to consumers, although the rate of change slowed during the pandemic.

Key POS lenders include Barclays Partner Finance. BNP Paribas (Creation), Novuna (formerly Hitachi Capital), Ikano Bank, Omni and Rematch Credit (DivideBuy). BNPL providers include PayPal Credit, Clearpay, Klarna and Etika Finance (formerly Paybreak).

Some larger retailers provide the finance from Group companies, including Home Retail Group and Shop Direct (Argos), often alongside other payment options including store cards.

Deko, acquired by the owners of NewDay, provides an online broking service

Smaller brokers, including some new fintech entrants, tend to specialise in service sectors such as medical / dentistry treatments, flights and holidays and home improvements.

Lenders operating mainly through brokers or a growing number of fintech lending platforms include Conister Bank, Honeycomb, Tandem Bank and Shawbrook.

Aggregate margins across the sector grew steadily until 2013, but then fell for several years as firms adapted to deal with more costly regulatory requirements, including some cases involving customer remediation programmes. Profitability of POS providers has increased again in the last couple of years, but the fast-growing BNPL segment is loss-making.


We expect further growth in the overall market driven by BNPL. The growth in BNPL is mainly a function of consumers who use these facilities using them for a greater proportion of their purchases.

The outlook for conventional POS is less certain, being a more mature product where the impact of the overall economy is more significant, with negative impact expected from:
– The cost-of-living crisis resulting in some consumers postponing larger, discretionary purchases of the type that would be well-suited to POS.
– Increases in interest rates making interest-free credit more expensive for retailers.
– Tightened affordability checks on new lending.

Other factors which could represent risks to market growth include:
– The continued deterioration in the UK economy and squeeze on household incomes
– Higher interest rates – especially if sustained for a long period – making interest-free credit more expensive for retailers, and leading to more retailers cutting back on interest-free subsidies (continuing a slow trend we have observed for several years)
– New regulation being tighter than currently expected by the market. This could take the form of greater requirements to confirm affordability of new loans and the removal of the current exemption that means retailers and service providers offering only interest-free credit for up to 12 months do not need to be authorised by the FCA.

Who is the report intended for?

Operators of point of sale businesses themselves

Investors in these businesses


Market regulators and policymakers

Banks, analysts, consultants and other parties with interests in the sector

What are the sources and methodology?

– Interviews with senior-level contacts in the consumer credit industry
– Research into 50 top UK retailers and their use of POS finance
– A case study on retailers in the city of Salisbury
– Extensive research into published industry sources
– In-depth analysis of the macroeconomic environment and relevant market drivers
– Financial analysis of the accounts of companies in the industry

Information from these sources has been synthesised and presented clearly and concisely with extensive use of charts and tables to illuminate points and support conclusions

About this report 2
Who was the report written by? 3
Summary 4
About Apex Insight 6
Contents 8

About the Market 14

Legal structure of POS finance solutions 14

Definition of credit          15

Interest-free exemption 15

Section 75            15

Summary             15

Market structure – POS 16

Role of retailers 16

POS products     17

Interest options 17

Interest-free subsidies   17

Payment arrangements and risk 17

Who offers POS finance?              18

Conventional POS finance via physical stores       18

Conventional POS finance via E-Commerce sites 19

Conventional POS finance via medical and other professional practices    19

Total conventional POS 19

Local case study: Salisbury           20

Adjacent markets include store cards and credit accounts              23

Store cards and credit accounts 23

Credit cards        23

Personal loans   23

Car finance         24

Small business POS         24

Market structure –BNPL 25

Customers          25

BNPL products  25

Lending decisions             25

Market entrants and other developments            25

Customers          26

Regulation of POS / BNPL              27

Regulatory requirements             28

Obtaining FCA authorisations      28

Changes to regulation    29

Market size and growth 30

Market size by loan books            30

Market size by volume of new lending    31

Market size by volume of lender revenues           32

Segmentation   33

Impact of BNPL on conventional POS       33

Market drivers  34

GDP       34

Retail sales          35

Internet retail    35

Consumer confidence    36

Credit card penetration and spending     36

Consumer borrowing     37

Interest rates     37

POS loan books as a proportion of retail sales      38

Lender yields     39

Impairment rates             39

Forecasts             40

Key drivers          40

Economic growth             40

Inflation and interest rates           40

Retail sales          41

Consumer borrowing     42

Impact of regulation of BNPL       43

POS market forecast       44

Market size by volume of new lending    44

Market size by loan books            45

Market size by volume of lender revenues           46

Market risks       47

Deterioration in UK economic performance         47

Significant interest rate rises       47

Other market risk factors              47

Competitive risk: Amazon             48

Competitive landscape  49

Overall market shares by lender 51

Finance penetration rate by sectors and leading retailers               53

Source: Apex Insight Analysis Brokers      54

Deko (NewDay) 55

Description         55

History  55

Product 55

Financials             55

Key clients           55

Other brokers    56

Platform providers          57

Key lenders        58

Barclays Partner               58

Description         58

History: 58

Products              58

Financials             58

Key POS Clients:                58

BNP Paribas Personal Finance (Creation Consumer Finance Ltd)  59

Description         59

History  59

Financials             59

Key POS clients  59

Clearpay              60

Description         60

History  60

Financials             60

Key Clients          60

Novuna 61

Description         61

History  61

Products              61

Financials             61

Key clients:         61

Home Retail Group         62

Description         62

History  62

Financials             62

Ikano     63

Description         63

History  63

Financials             63

Key clients           63

Klarna (including Close Brothers Retail Finance)  64

Description         64

History  64

Close Brothers Retail Finance      64

Financials             64

Key clients           65

Laybuy Holdings                66

Description         66

History  66

Financials             66

Key clients           66

OMNI Capital Retail Finance Ltd 67

Description         67

History  67

Financials             67

Clients  67

Etika Finance (afforditNOW)       68

Description         68

Financials             68

Key clients           68

PayPal   69

Description         69

Products              69

Financials             69

Key clients           69

Rematch Credit (DivideBuy)        70

Background        70

Products              70

Financials             70

Customers          70

Secure Trust       71

Description         71

History  71

Products              71

Finance 71

Key clients           71

Shop Direct         72

Description         72

History  72

Products              72

Finance 72

Other lenders    73

Bumper International     73

Buyline Limited 73

Caledonian Consumer Finance   73

Carnegie Consumer Finance        73

First Senior Finance Limited         73

Humm  73

Lending Works Limited  74

Openpay             74

Pay Later Financial Services (Fly Now Pay Later)  74

PayitMonthly Limited     74

Payment Assist 74

Premium Credit 75

Propensio Finance           75

Shawbrook Bank              75

Skytech Capital  75

Snap Finance Ltd. (Pay Weekly) 76

Social Money Ltd (Payl8r)             76

Specialist Lending Ltd (Duologi) 76

Splitit Capital UK               76

Tabeo   77

Tandem Money (Allium Lending)               77

Tymit Limited     77

Wesleyan Bank 77

Zilch Technology              77

Zip          78

New entrants    79


List of charts and tables

POS finance market definition    14

Point of sale (POS) finance channels        16

Number of independent stores offering POS finance        18

Usage of POS finance by Salisbury retailers           20

Conventional POS terms offered by leading retailers         22

Number of credit cards in issue / m, end of year 23

Key FCA regulatory requirements relevant to POS finance              28

Total market loan books 2009-2021/ £m                30

Total market new lending 2013-2021 / £m            31

Total market POS gross revenues 2013-2021 / £m              32

UK real GDP / % annual changes 34

Retail sales / annual % change    35

Internet retail as % of total retail sales    35

UK consumer confidence              36

Number of credit cards in issue, spending on credit cards / m, £bn             36

UK outstanding unsecured consumer credit / £bn              37

Bank interest rates / %   37

Combined loan book value as a percentage of retail sales               38

Combined revenues as % of combined loan book value: top lenders          39

Impairments balance as % of retail POS loan book             39

UK Consumer Price Inflation (CPI) / % annual change        40

Retail sales / annual % changes  41

Internet retail spend / £bn           41

…as proportion of total retail       41

Unsecured consumer credit / £bn             42

Total market new lending 2013-2021 / £m            44

Combined loan books of leading POS finance lenders as a percentage of retail sales           45

Total market loan books 2009-2023/ £m                45

POS finance revenue as a % of loan book               46

Total market POS gross revenues 2013-2021 / £m              46

Leading lender POS finance revenue trends 2018/19 to 2020/21 £m          49

Sector pre-tax margin trends 2020-2021 / %         50

Lenders’ market shares 2017-2021            51

Lenders’ share of 250 online retailers, February 2022       51

Number of finance companies mentioned in sample of 250 online retailers by retail sector, February 2022              54

Clydesdale Financial Services Ltd summary financials        58

Creation Consumer Finance Ltd summary financials          59

Home Retail Group Card Services Ltd. summary financials              62

OMNI Capital Retail Finance Ltd summary financials          67

Secure Trust (V12 Retail Finance) summary financials       71

Shop Direct Finance Company Limited summary financials             72


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