The Checkout Decision That Costs UK Shoppers Millions
Every day, millions of UK consumers face the same choice at checkout: pay with a credit card, or split it into three interest-free instalments with Klarna, Clearpay, or one of their competitors. For smaller purchases, BNPL wins on convenience every time. But when something goes wrong — a faulty product, a failed delivery, a retailer collapse — the differences between these payment methods become financially significant.
In 2026, the UK BNPL market is worth an estimated £20 billion annually, and millions of people are using these services without understanding the consumer protection gap they’re accepting. For more on managing your finances, check out our guide on best rewards credit cards UK.
Credit Cards: The Strongest Consumer Protections Available
Credit cards are the only consumer payment method that gives you statutory legal protection under Section 75 of the Consumer Credit Act 1974.
What Section 75 means in practice:
If you use a credit card to pay for anything between £100 and £30,000, your card issuer is jointly liable with the retailer if:
- The goods are faulty or not as described
- The service is not delivered
- The retailer goes into administration or liquidates
You don’t have to prove the retailer did anything wrong — just that you haven’t received what you paid for, or that the goods are not of satisfactory quality. The credit card company becomes directly responsible, regardless of whether the retailer cooperates or is even still in business.
This has saved UK consumers billions of pounds when travel companies, retailers, and service providers have gone bust — because they could claim the full purchase price from their credit card company.
BNPL: Useful Tool, Weaker Protection
BNPL services like Klarna, Clearpay, and Laybuy have come under FCA regulation in the UK since 2024, improving affordability checks and transparency. But the protection gap remains.
What BNPL offers:
- Chargeback rights — since Klarna and Clearpay operate through Visa/Mastercard, you have some chargeback rights. However, chargebacks are voluntary scheme rules, not statutory rights. Providers can reject them, and the process is less reliable than Section 75.
- Consumer Rights Act — your rights under the CRA (faulty goods, unfit for purpose) apply regardless of payment method. But the CRA gives you rights against the retailer — not the payment provider — making those rights worthless if the retailer goes bust.
What BNPL does NOT offer:
- Section 75 statutory joint liability
- Guaranteed refund path when retailer is insolvent
- The same level of FOS escalation rights as a credit card complaint
The Real-World Scenarios Where the Gap Matters
Scenario 1: Retailer goes into administration
You paid £300 for furniture using Klarna’s Pay Later. The retailer goes into administration before delivery. You still owe Klarna £300, but you have no goods. Your chargeback claim may or may not succeed depending on the timing and Klarna’s own assessment. With a credit card, your Section 75 claim against the card issuer would be straightforward.
Scenario 2: Faulty goods, retailer unresponsive
You bought electronics with Clearpay. They’re faulty. The retailer ignores your emails. With BNPL, you can raise a dispute with Clearpay — but they’ll look for evidence of the retailer’s fault before intervening. With a credit card, Section 75 means your card issuer is equally liable and must investigate your claim.
Scenario 3: Package holiday or flight cancelled
This is where Section 75 is most powerful. Always pay for travel with a credit card. The failure of travel companies is a recurring theme, and Section 75 has recovered billions for UK travellers when airlines and holiday companies collapsed.
When BNPL Makes Sense Despite the Trade-Offs
For routine purchases under £100 from established retailers — clothing, homeware, everyday shopping — the consumer protection gap is less material. The risk of the retailer going bust is lower, and the dispute resolution process at major BNPL providers (Klarna’s dispute resolution is actually quite responsive) is adequate for routine issues.
BNPL’s interest-free structure also provides genuine cash flow benefits for consumers who will reliably pay instalments on time.
The decision matrix: above £100, from any retailer, especially travel → use a credit card. For smaller everyday purchases from established retailers → BNPL is a reasonable choice if you’re confident in repayment.
FAQ
Q: Can you use both BNPL and a credit card on the same purchase?
A: Technically in some cases, but the BNPL provider processes the payment — the credit card charges would need to be for the BNPL transaction itself, which likely doesn’t qualify for Section 75 as it’s a payment to the BNPL firm rather than the retailer directly.
Q: Does Section 75 apply to debit cards?
A: No. Section 75 is exclusive to credit cards. Debit card purchases have limited voluntary chargeback rights through Visa/Mastercard but no statutory protection.
Q: Is using BNPL going to affect my mortgage application?
A: Yes, potentially. BNPL now appears on credit files for major providers. Frequent use or missed payments can affect your credit score and how lenders assess your financial commitments.
Q: What’s the maximum Section 75 protects me for?
A: Section 75 covers purchases between £100 and £30,000. For purchases above this, chargeback and civil claims are the routes available.
Q: If I pay part of a purchase with a credit card and the rest by other means, am I still covered?
A: Yes — you only need to put any part of the price on the card (even £1) for Section 75 to apply to the full value, as long as the total purchase is between £100 and £30,000.