In the evolving world of buy-now-pay-later (BNPL) services, Affirm and Klarna have emerged as frontrunners, particularly with their expansions into physical retail environments. As of 2025, both companies are pushing aggressively to integrate their installment payment options directly at checkout counters in stores, aiming to capture a larger share of everyday consumer spending beyond online shopping. This shift comes amid rising economic pressures, where shoppers are increasingly turning to flexible financing for everything from groceries to apparel.
Affirm, known for its transparent fee structure and credit checks, has partnered with major retailers like Walmart and Macy’s to offer in-store BNPL options. Users can scan a QR code at the point of sale or use the Affirm app to split purchases into interest-free or low-interest installments. Klarna, on the other hand, emphasizes short-term “pay in four” plans and has inked deals with chains such as Target and Best Buy, allowing seamless in-store financing without the need for traditional credit cards.
Expanding Footprints in Brick-and-Mortar Retail Amid Economic Shifts This in-store push is not just a convenience; it’s a strategic response to changing consumer behaviors in a post-pandemic economy marked by inflation and wage stagnation. According to a report from PrimeWay Federal Credit Union, BNPL services like Affirm and Klarna saw double-digit growth in in-store adoption in early 2025, with users appreciating the lack of hidden fees compared to credit cards. However, the Consumer Financial Protection Bureau has cautioned about potential debt traps, noting that delinquency rates for longer-term loans hovered around 2.18% for Klarna in Q2 2025.
Industry insiders point out that Affirm’s model, which often includes interest for larger purchases, contrasts with Klarna’s largely interest-free approach, creating distinct niches. Recent data from Chargeflow highlights how Affirm appeals to credit-conscious consumers, while Klarna attracts impulse buyers with its gamified app experience.
Riding the Wave of IPO Momentum and Market Valuation Klarna’s recent initial public offering has thrust the BNPL sector into the spotlight. The Swedish fintech giant debuted on the New York Stock Exchange in September 2025, raising eyebrows with a valuation nearing $20 billion after shares jumped 30% on the first day, as reported by Reuters. This marks the largest IPO of 2025, surpassing expectations and underscoring investor confidence in BNPL’s growth potential, especially in physical retail.
Affirm, which went public in 2021, has seen its stock advance 41% in 2025 amid this rivalry, per insights from Inkl. Yet, challenges loom: Posts on X (formerly Twitter) reflect growing consumer wariness, with users noting a surge in BNPL for essentials like groceries — one in seven Americans reportedly using services like Affirm or Klarna for food purchases, echoing sentiments from viral discussions earlier this year.
Consumer Trends and Regulatory Scrutiny in the BNPL Arena The in-store expansion is fueled by partnerships that correlate strongly with revenue growth. Klarna’s availability at Walmart, for instance, is touted as a key driver for future expansion, according to Payments Dive. Affirm has similarly deepened ties with Apple Pay for in-store integrations, allowing users to finance iPhone purchases on the spot, as detailed in updates from MacRumors.
However, this boom isn’t without risks. News from Morningstar indicates rising delinquency rates, with Klarna’s Q1 2025 losses ballooning to $99 million, a 110% increase, amid higher credit losses. Regulators are watching closely, with the CFPB pushing for clearer terms to prevent overextension.
Strategic Differentiators and Future Projections for BNPL Leaders For industry players, the key differentiator lies in technology and user trust. Klarna’s AI-driven personalization helps recommend in-store deals, while Affirm’s focus on credit reporting builds long-term financial health for users. A market analysis from GlobeNewswire projects the global BNPL market to reach $80.15 billion by 2033, with in-store segments growing at a 27% CAGR.
As competition heats up, both companies are innovating to stay ahead. Klarna’s post-IPO strategy includes expanding “pay later” options in emerging markets, while Affirm invests in fraud prevention for in-store transactions. Insiders predict that by year-end 2025, BNPL could account for 15% of all retail payments, transforming how consumers shop in physical spaces.
Navigating Economic Realities and Consumer Debt Concerns Yet, the reliance on BNPL for necessities raises alarms. X posts from financial analysts highlight a
