Every UK travel company talks about spreading the cost of a holiday, but that phrase now covers two genuinely different products with different legal status. One is a deposit-and-balance schedule arranged directly with your travel agent. The other is third-party Buy Now Pay Later — Klarna or Clearpay — and since 15 July 2026 that option has come under UK financial regulation for the first time. If you're working out how to pay for a holiday in instalments this year, the honest starting point isn't which one sounds cheaper, it's which one you're actually borrowing from, and what happens if a payment gets missed. This guide sets out both routes, what the new rules changed, and where your money is protected either way.
Last verified: 12 September 2026. The FCA's Buy Now Pay Later regime is only two months old at the time of writing — treat the regulatory detail below as correct today, and always check your provider's current terms before you commit to anything.
Can you pay for a holiday in instalments?
Yes. Most UK travel agents, Travel Orbit included, offer more than one way to do it, and the options work very differently under the hood. You can secure a booking with a deposit and clear the balance directly with the agent before you travel — no application, no third party, no interest. Or you can use a separate Buy Now Pay Later provider, which pays the agent on your behalf and then collects repayments from you on its own terms, as a regulated lender. Both are legitimate ways to book a holiday you couldn't pay for outright today, but they are not the same thing legally, and confusing the two is exactly what the new rules exist to stop.
Two ways to spread the cost
Travel Orbit offers both routes side by side — an in-house Book Now Pay Later deposit schedule and a third-party Fly Now Pay Later product through Klarna or Clearpay. The table below sets out the practical difference, because it is the difference that decides which one is right for your situation.
| Feature | Book Now Pay Later (Travel Orbit, in-house) | Fly Now Pay Later (Klarna/Clearpay) |
|---|---|---|
| Who you're paying | Travel Orbit directly | A third-party lender — Klarna or Clearpay |
| Regulated by the FCA? | No — exempt as merchant/supplier credit | Yes, since 15 July 2026 |
| Credit check | No | Yes, plus a provider affordability check |
| Interest charged | No | Depends on the provider's product — check current terms |
| Affects your credit score | No | Can, particularly if a payment is missed |
| How much you pay upfront | £50pp flight deposit, or a low per-package holiday deposit | Set by the provider at checkout |
| If you miss a payment | Standard cancellation terms apply to the booking | Provider may charge a fee; can affect your credit file |
How Book Now Pay Later works at Travel Orbit
Our in-house scheme is the simplest of the two, because there is genuinely no third party involved. You pick your flights or holiday, pay a deposit to secure it — a £50 per-passenger seat deposit on flights, or a low per-package deposit on holidays, shown on the specific package — and clear the remaining balance across a schedule agreed with us at booking, finishing before your departure date. There's no application and no credit check, because you're not borrowing from anyone. Deposits are non-refundable in line with our standard cancellation policy, which is worth reading before you commit to a date. Full details, including current deposit levels, are on the Book Now Pay Later page.
How Fly Now Pay Later (Klarna/Clearpay) works
Fly Now Pay Later is a different product entirely: you pay nothing to Travel Orbit today, your chosen provider — Klarna or Clearpay — funds the booking, and you repay that provider over time under its own agreement. Travel Orbit is a credit broker introducing you to the provider, not a lender, and doesn't set the repayment terms, fees, or interest — those are the provider's, shown to you before you commit, as the new rules require. Approval depends on the provider's own affordability check, and eligibility generally requires you to be 18 or over and a UK resident, subject to status. The specific fee and repayment structures are set independently by Klarna and Clearpay and can change, so we deliberately don't quote figures here — check the live terms on our Fly Now Pay Later page or directly with your provider before you book.
What changed on 15 July 2026
Before this year, third-party Buy Now Pay Later sat almost entirely outside UK financial regulation. That changed on what the industry has been calling "Regulation Day."
| Before 15 July 2026 | From 15 July 2026 | |
|---|---|---|
| FCA authorisation | Not required for Buy Now Pay Later lenders | Required (or Temporary Permission) for regulated Deferred Payment Credit lenders |
| Affordability checks | Not mandatory | Lenders must check you can afford to repay before lending |
| Pre-agreement disclosure | Inconsistent across providers | Lenders must clearly state the amount borrowed, repayment dates, repayment amounts, and any late fees |
| Financial Ombudsman access | Not available | Available if you're unhappy with how your lender has treated you |
| Section 75-style protection | Not available | Available on regulated Deferred Payment Credit agreements |
| In-house merchant deposit schemes | Unregulated | Still unregulated — the merchant credit exemption is unchanged |
The FCA's own summary of the change is direct: "We started regulating Deferred Payment Credit, often known as Buy Now Pay Later, on 15 July 2026." Any agreement taken out before that date remains under the old, unregulated terms for its lifetime.
Is a holiday deposit plan regulated credit? (the merchant exemption)
No — and this is the single most misunderstood part of the new rules. The FCA's own guidance states the exemption plainly: "If you buy something from a business and use DPC that's provided by that same business, it's not regulated." DPC is Deferred Payment Credit, the FCA's formal name for Buy Now Pay Later. The regulation applies to lending from a separate business — a third-party lender like Klarna or Clearpay — not to a schedule arranged directly with the seller of the holiday itself.
That's exactly what Travel Orbit's in-house Book Now Pay Later is: a deposit paid to us, and a balance paid to us, with no other party lending you anything. The exemption turns on who the lender is relative to the seller: there is no separate lender here, so there is no third-party credit agreement to regulate. It is a booking deposit and a payment schedule, not borrowing. To be clear about what that does and doesn't mean: being exempt is not the same as being FCA-authorised, and it doesn't come with Financial Ombudsman access or the Section 75-style protection that now applies to a regulated Klarna or Clearpay agreement. It simply means an older set of consumer rules applies — the same ones that have always governed a standard travel deposit and cancellation policy.
What protections you get with Klarna or Clearpay now
If you do use third-party Buy Now Pay Later, the position genuinely improved on 15 July 2026. Your provider now has to check whether you can afford the repayments before lending, rather than approving on demand. It has to show you, upfront, how much you're borrowing, when repayments fall due, how much each one is, and what a late payment costs — set out clearly before you commit, not buried in a separate terms page. If something goes wrong with the arrangement, you can complain to the Financial Ombudsman Service, and depending on your agreement you may have Section 75-style cover if the goods or service you paid for turn out faulty or undelivered. We can't tell you the exact fee or interest position for Klarna or Clearpay here, because those are commercial terms the providers set and can change — read what's shown to you at checkout.
Is your money protected? ATOL and instalment payments
Whichever payment method you use, the protection on the travel booking itself works the same way. Flights and flight-inclusive holidays booked with Travel Orbit are financially protected via our licensed ATOL supplier partners. We are also IATA accredited — a professional credential that allows us to issue airline tickets directly, separate from financial protection. That cover applies to the trip, not to the payment method layered on top of it.
| Payment stage | What protects it |
|---|---|
| Deposit paid on an ATOL-eligible booking | ATOL protection applies from the point of booking, regardless of payment method |
| Balance paid via our in-house instalment schedule | Same ATOL protection continues to apply — nothing changes because you're paying in stages |
| Amount financed through Klarna or Clearpay | Underlying trip still covered by ATOL; the credit agreement itself is separately covered by the new DPC consumer protections from 15 July 2026 |
In other words, ATOL protection and Buy Now Pay Later regulation cover two different things — one covers the trip if a supplier fails, the other covers the credit agreement if the lender treats you unfairly. Read the full detail of what ATOL actually covers, and what it doesn't, in what "ATOL protected" really means.
Credit score impact: deposits vs BNPL
This is where the two products diverge most for anyone thinking ahead about their finances. An in-house deposit plan involves no credit check at any point, because you're not borrowing from anyone — it has no bearing on your credit file, in either direction. Third-party Buy Now Pay Later is different: because Klarna and Clearpay are now regulated lenders, missing a payment on a Fly Now Pay Later agreement can be reported and can affect your credit file, potentially making it harder to borrow elsewhere in future. We can't tell you the exact point at which a missed payment gets reported, because that's set by the individual provider and its arrangements with credit reference agencies — check your provider's own terms if this matters to your decision.
Which option suits which traveller
| Choose in-house Book Now Pay Later if… | Choose Fly Now Pay Later (Klarna/Clearpay) if… |
|---|---|
| You'd rather not involve a separate lender at all | You want the cost split by a dedicated finance provider |
| You want the simplest possible arrangement — no application | You're comfortable with a credit check and an affordability assessment |
| You're booking a family trip, such as Umrah, and want one straightforward schedule with us | You want the specific structured protections a regulated credit agreement now carries |
| You'd prefer nothing that could ever touch your credit file | You're happy for repayments to be managed by Klarna or Clearpay rather than the travel agent |
For a lot of families, especially those planning a significant trip like Umrah, the in-house route is the more familiar shape: a deposit now, a clear schedule after that, no separate lender involved. Our guide to how much Umrah costs from the UK sets out real package prices and shows how a deposit-and-balance schedule applies to a trip like that in practice.
Which payment plan should you pick?
There isn't a single right answer — it depends on whether you'd rather keep the arrangement with your travel agent, or use a dedicated finance provider with its own regulated protections. What matters is going in with your eyes open: know who you're actually borrowing from, know what happens if a payment is missed, and know your ATOL protection on the trip itself doesn't change either way. If you're planning a package to a destination further afield or a family holiday closer to home, tell us your dates and group size and we'll set out a real deposit-and-balance schedule alongside the Klarna and Clearpay options, so you can compare them side by side rather than guessing. Get in touch and we'll talk you through both.
Sources
- FCA — Buy Now Pay Later: consumer guidance (checked 12 September 2026)
- FCA — Regulating Buy Now Pay Later (checked 12 September 2026)
- FCA — New protections confirmed for Buy Now Pay Later borrowers (checked 12 September 2026)
- FCA Handbook — CONC 3, financial promotions and communications with customers (checked 12 September 2026)
- Travel Orbit live product terms, Book Now Pay Later and Fly Now Pay Later pages, 12 September 2026
Looking specifically at Clearpay? We cover which UK travel companies accept it, how to check, and what the July 2026 rules changed in can you book a holiday with Clearpay?