If you run an online business in the UK, whether you’re a coach, creative, or service provider, you’ve probably noticed a big difference between US and UK payment models.
In the US, it’s standard to see offers framed like this:
“£2,000 pay in full OR 3x £750.”
That’s a £250 premium just for choosing a payment plan. Totally normal over there.
But here in the UK? That setup can carry legal risks if it’s not done correctly. And beyond compliance, there’s also the question of whether adding fees aligns with your values and brand.
This post breaks down both sides, the law and the ethics, so you can create payment structures that are profitable, compliant, and inclusive.
The Legal Side: UK Consumer Credit Law
Payment plans = credit agreements (sometimes)
In the UK, charging more for a payment plan can count as offering credit. That brings you under the Consumer Credit Act 1974 (CCA) and FCA rules.
- If your plan includes interest or extra fees, it usually becomes a regulated credit agreement.
- To stay exempt, instalments must be under 12 months, interest-free, and fee-free (aside from genuine default charges).
Break the rules, and you’re essentially offering credit without authorisation, which can be a criminal offence.
FCA authorisation
If you add charges, you may need to be authorised by the Financial Conduct Authority. That means:
- Credit agreements in writing.
- APRs disclosed.
- Pre-contract info given to clients.
- Fair treatment rules applied.
Most OSPs don’t want to (and shouldn’t) mess with this.
Consumer Rights Act 2015
Even if you dodge the CCA issue, the CRA 2015 says contract terms must be fair and transparent.
- You can’t bury surcharges in the small print.
- You can’t tack on a “random admin fee” that isn’t proportionate to your actual costs.
- Any higher total price must be clear upfront (e.g., “6 payments of £100 = £600 total, includes £50 admin fee”).
If it’s hidden or disproportionate, the CMA can step in, and the clause may be unenforceable.
CPRs 2008 and “drip pricing”
The Consumer Protection from Unfair Trading Regs 2008 ban misleading omissions. That means:
- If your payment plan costs more, you must show that total upfront.
- No “headline price” of £500, only to reveal at checkout that paying monthly costs £550.
This is exactly what regulators cracked down on in airline pricing cases, and the same rules apply to you.
The Ethical Side: Should You Charge More?
Now let’s step away from the law and talk about values.
Payment plans aren’t just a sales tactic. They’re an accessibility tool.
Not everyone has savings, credit, or family wealth to lean on. Many of your dream clients, especially women, neurodivergent folks, people of colour, and working-class entrepreneurs, need instalments to access your work.
When you add a 20% “flexibility fee,” you unintentionally reinforce the same financial barriers you say you’re helping them escape.
What if instead:
- Payment plans were a fair, accessible default?
- You focused on protecting your own cashflow (with deposits, automated billing, buffers) instead of penalising your client?
- Your pricing strategy reflected equity as much as profit?
Flat, transparent instalments aren’t just easier to sell, they build trust.
When might it make sense to charge more?
There are rare cases where surcharges can be fair:
- Longer-term financing (over 12 months).
- Significant admin or processing costs.
- Genuine interest on third-party finance (like Klarna).
If that’s you, be upfront: “12 months at £100 (total £1,200, includes £200 interest).”
The key is transparency and proportionality.
Your Cheat Sheet: UK Payment Plan Rules
You can charge more for payment plans in the UK if:
- You’re FCA authorised (unless you stay under the interest-free 12-month exemption).
- You disclose the total cost clearly and transparently.
- Any fee is proportionate and not unfair.
But just because you can doesn’t mean you should.
For most online service providers, a flat payment plan that mirrors your pay-in-full price is legal, ethical, and far simpler.
Why this matters for your business
Your pricing is more than numbers. It’s a reflection of your brand values.
When you talk about financial empowerment and inclusivity, your payment structures are part of that story. Clients don’t just buy your offers — they experience your values through the way you price and deliver them.
If you want to build a business that’s both profitable and accessible, your payment plans need to reflect that balance.
Next Steps
If you’re not sure how to structure your offers so they’re compliant, ethical, and cashflow-friendly — this is exactly what we cover inside Cashflow Confident.
We’ll build a system where:
- You can pay yourself consistently.
- Your offers fund your lifestyle without client confusion or legal risk.
- Your payment options align with your values and your bank balance.
Because the best business model? One that works for you and your clients.
FAQs on Charging More for Payment Plans in the UK
Is it legal to charge more for payment plans in the UK?
Yes, but only if you follow consumer credit law. Under the Consumer Credit Act 1974, charging extra for instalments usually makes it a regulated credit agreement. Unless you’re FCA authorised, you must stick to interest-free, fee-free plans of 12 months or less. Anything outside of that (interest, fees, longer terms) requires FCA authorisation and proper credit agreements.
Do payment plans count as credit agreements?
They can. A plan is treated as credit if it includes charges (interest, admin fees, surcharges) or runs longer than 12 months. In that case, you’d need to meet the rules on disclosures, APR calculations, and consumer protection. If the plan is short-term, fee-free, and interest-free, it may stay exempt.
Can I add an admin fee to instalments instead of interest?
Not really. UK law treats an “admin fee” the same as interest, it increases the cost of credit. The FCA has made clear that any fee tied to the instalment option is part of the cost of credit. So, unless you’re FCA authorised, adding a flat fee makes your plan regulated.
What does the Consumer Rights Act say about payment plans?
The Consumer Rights Act 2015 requires payment terms to be fair and transparent. That means:
- You must show the full cost upfront.
- Any surcharge must be proportionate and not arbitrary.
- Hiding fees in the small print could make them unenforceable.
What are the risks of charging more without FCA authorisation?
Offering regulated credit without FCA authorisation can be a criminal offence. At minimum, it risks enforcement by the CMA, FCA, or Trading Standards, and any unfair terms may be struck down. Beyond fines, it damages client trust and could expose your business to legal claims.
Should coaches and online service providers charge more for payment plans?
Legally, you can if you’re compliant. But strategically and ethically? Often not. For most online service providers, flat payment plans that mirror the pay-in-full price are simpler, more accessible, and build trust. They help clients say yes without penalising them for needing flexibility.
What’s the best way to structure ethical payment plans?
The safest and most values-aligned option is to:
- Offer equal instalments that add up to the same total as your pay-in-full price.
- Be transparent about terms (number of payments, dates, totals).
- Protect your own cashflow with deposits, automated billing, and forecasting instead of surcharges.
Sources: Relevant provisions and guidance have been drawn from the Consumer Credit Act 1974, Consumer Rights Act 2015, Consumer Protection from Unfair Trading Regulations 2008, FCA handbook and guidance, and CMA/OFT materials, including – the FCA’s instalment credit exemption criteria (fca.org.uk), CMA guidance on unfair terms (assets.publishing.service.gov.uk), Business Companion advice on payment surcharges and CPRs (businesscompanion.info), the OFT’s action on airline surcharges under the CPRs (gov.uk), and recent policy developments on BNPL regulation (gov.uk). Each underscores the imperative of transparency and fairness when charging consumers more for the option to pay over time.
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