BNPL players turn up the heat: Affirm and Klarna compete for banks, growth, and market leadership
- BNPL providers, Affirm and Klarna, initially grew by integrating into e-commerce checkouts, and are now contending for partnerships with major banks.
- With banks now entering the BNPL space, firms like Affirm and Klarna have an opportunity to further solidify their positions and for the BNPL industry at large.
Where does BNPL belong in the bigger financial picture?
The buy now, pay later (BNPL) race has shifted into a new phase. BNPL providers, Affirm and Klarna, initially grew by integrating into e-commerce checkouts, and are now contending for partnerships with major banks. This is also a sign that financial institutions are warming up to the idea of installment-based lending.
Both firms are making big moves to solidify their positions, but their distinct approaches, business models, and competitive strategies bring them advantages, combined with challenges. With Klarna moving toward a public debut and Affirm strengthening its alliances, the two are in the game not just for consumers but also for the financial ecosystem players themselves.
A new seeding ground: Big bank partnerships
For years, traditional banks dismissed BNPL as an unsustainable lending model, prone to high default rates and regulatory scrutiny. That stance is shifting. With consumer adoption of BNPL surging, major banks are rethinking their position – they are not just tolerating BNPL now but actively making moves to integrate it into their ecosystems.
Affirm’s recent partnership with J.P. Morgan Payments last month is a clear signal that BNPL is no longer just another alternative lending model — it’s mature enough to become embedded within traditional banking. Through this deal, merchants using J.P. Morgan’s Commerce Platform can now offer Affirm’s BNPL loans at checkout, integrating short-term financing directly into the bank’s payment ecosystem. This collaboration puts Affirm in front of a massive merchant base of one of the world’s largest banking networks, solidifying its position as a key BNPL provider in North America.
In February, J.P. Morgan also teamed up with Klarna to roll out a B2B BNPL offering, bringing installment payment options to its business customers. Through this partnership, companies using J.P. Morgan Chase’s payments commerce platform will be able to split payments over time, later this year, marking a significant step in BNPL’s expansion beyond consumer retail.
How Affirm and Klarna compare — and where they differ
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