Retailers have been criticised for offering discounts as high as £1,000 to shoppers if they use buy now, pay later schemes to make purchases.
Debt support charities warned that the increasingly prevalent incentives risk pushing people to spend more than they can afford.
There is no suggestion of rule-breaking by retailers. But it comes as growing numbers of Britons report struggling with debt after using buy now, pay later products, which allow users to take out a loan for a specific purchase and pay it back in instalments.
The products typically offer an interest-free loan for an initial period, but missed payments rack up hefty fees and can lead to a damaged credit record or even debt collection.
Big-name retailers including Sports Direct, JD Sports and Shein offer discounts to shoppers who take advantage of these deals, analysis by The i Paper has found.
The Frasers Group of retailers – including Sports Direct, Flannels, Frasers and Jack Willis – has been offering an extra 10 per cent off for those paying with its “Frasers Plus” scheme.
A Chloé dress at Flannels priced at £11,449 last week was discounted to £10,304 for those using Frasers Plus – a reduction of more than £1,100.
A pair of Nike Air Max trainers was £135 at Sports Direct but £121 for those paying with Frasers Plus.
At Frasers, a four-piece set of Jack Willis bedroom furniture was £200 but £150 with Frasers Plus, while a Daewoo air fryer was discounted from £70 to £63.
JD Sports offers £10 off for orders over £100 purchased with Klarna, one of the biggest buy-now, pay-later providers.
Online marketplace eBay has been known to give shoppers discounts for paying with Klarna, too. Last year it offered up to £50 off to customers spending at least £550.
Klarna launched a cashback scheme in the UK last November, which gives customers up to 14 per cent off at a variety of retailers.
Some of the biggest discounts include 14 per cent off at Glasses Direct, 9 per cent at Ray-Ban, 11 per cent at Shein and 10.5 per cent at Disney+.
Sports Direct’s website featured its buy now, pay later scheme prominently on the home pageOnline retailer Very offers 20 per cent off shoppers’ “first credit order” using its Very Pay service.
Retailers who offer payment with third-party buy-now, pay-later providers typically pay them a commission on sales.
Adam Butler, public policy manager at StepChange debt charity, urged the Treasury and the financial regulator, the Financial Conduct Authority, to intervene to stop these incentives, which are more likely to be taken up by those on lower incomes who are at risk of financial difficulty.
He said: “It’s fundamentally an ethical point. If a discount is only available if you borrow, it encourages people to do something that has more risk.”
In 2011, shops were banned from offering instant discounts to customers buying goods with store credit cards after a voluntary code was agreed between banks, the British Retail Consortium and the Government.
Butler said the agreement, made after evidence showed the incentives were fuelling debt, should be revisited and updated to include buy-now, pay-later schemes.
Grace Brownfield, from National Debtline, another debt advice charity, said it was not “appropriate” for retailers to offer discounts to take on credit and called for a voluntary agreement between retailers or regulatory intervention to stop this from happening.
She said: “It can be easy to take on more than you can afford through those products. When a discount is being offered to use the buy now, pay later product, it’s even more of an incentive to use that, which increases the risk that people might pay that way even when it’s not appropriate or affordable for them.”
A Versace dress was reduced by nearly £200 for those paying with Frasers’ buy now, pay later schemeOne in 10 people – or 11,000 – who get help from National Debtline have buy now, pay later debt, owing an average of £600. This has increased from seven per cent in 2024 and three per cent in 2021.
Half of those contacting the helpline are under the age of 34, and more than one in 10 are under 24. They are more likely to be women.
Luke Murphy, a Labour MP on the Treasury select committee, said retailers “should not be incentivising people to get into debt who are not able to afford it”.
He said: “From July 2026, the government will require stricter, mandatory affordability checks for buy now, pay later schemes.
“Ahead of this I would urge retailers to curb discount deals linked to debt schemes without knowing whether such credit is affordable for the consumers using it.”
John Grady, another Labour MP on the committee, said: “Excessive discounts are a real concern – they push people into buying when they cannot afford repayments.
“It’s essential the Financial Conduct Authority enforces its new rules to make lenders properly assess affordability, treat people who have fallen behind with payments fairly, and take special care with vulnerable customers.”
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A JD Sports spokesperson said it provides customers “with a variety of payment methods so they can decide what works best for them”.
They added: “The promotion referenced provided customers with the option to use Klarna to pay in full at the time of purchase. All of our payment options are listed with clear links to terms and conditions, as well as FAQs and contact details for each payment provider.”
A spokesperson for The Very Group said it offers flexible payment options to help customers and has “robust affordability and credit checks and clear communication in place to ensure our products are used appropriately”.
A spokesperson for Klarna said its cashback programme is available to anyone buying in the Klarna app, including those who pay instantly in full and those who use a debit card.
Shein, eBay, Ray-Ban, the Frasers Group, Disney+, Glasses Direct, the Financial Conduct Authority and the Treasury were approached for comment.
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