Member Exclusive, Payments

Klarna looks to capitalize on US holiday sales with in-store BNPL expansion

  • Klarna has collaborated with FreedomPay and Simon Property Group to offer in-store BNPL solutions ahead of the holiday season.
  • The Swedish firm is looking to improve its offline visibility by expanding its presence in physical retail stores across the US.

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Klarna looks to capitalize on US holiday sales with in-store BNPL expansion

This holiday season, payments firm Klarna is looking to expand its brick-and-mortar reach across the US. The firm recently announced an integration with commerce platform FreedomPay, which will allow it to offer its BNPL solution in-store to FreedomPay’s network of companies including Foot Locker, FedEx, and Jo-Ann Stores.

The service is kicking off in the US, with plans to expand globally over the coming months. It allows shoppers at FreedomPay’s participating retail stores to check out using the Klarna app by performing a one-time registration to generate their unique in-store QR code. A contactless payment can then be made by scanning the code. Shoppers can pay in four interest-free installments, just as they would when shopping online.

Klarna has also launched a multi-year strategic partnership with Simon Property Group, the largest shopping center owner and operator in the US. The collaboration will provide customers at Simon shopping malls and outlets with access to Klarna’s in-store payment solutions. Additionally, Klarna will provide performance-based digital marketing capabilities to physical retailers and collaborate with Simon on marketing campaigns, in-mall activations, and communication programs.

Holiday retail sales in the US are on track to exceed $1 trillion this year. The market share of ecommerce is growing rapidly – it will take up a record 18.9% of total holiday season sales. However, that still means that the vast majority of holiday sales – worth over $800 billion – will take place in-store. With a firm foothold in the ecommerce market, Klarna wants to expand its reach to brick-and-mortar customers by offering them flexible payment options in time for the holidays.

“Expanding our in-store presence is a major priority for Klarna,” said David Sykes, head of North America at Klarna. “We were one of the first flexible payments providers to offer in-store services, and our physical retail footprint now includes over 78,000 brick-and-mortar stores globally including Bed, Bath & Beyond, Macy’s, and The North Face.”

Shoppers are all set to head back to physical stores this holiday season. Klarna’s 2021 Holidays Unwrapped report finds that 30% of consumers plan to shop primarily in-store, while 27% want to do a mix of online and in-store shopping. Moreover, consumers have grown accustomed to the convenience of the online checkout experience, and increasingly expect the same in-store. According to Klarna’s 2021 Reopening Report, nearly three out of four (74%) shoppers now seek out flexible payment options when shopping online as well as in-store.


“As ecommerce continues to grow, consumers increasingly expect brick-and-mortar retailers to offer the same level of convenience and flexibility that online shopping offers,” said Sykes. “For retailers, this means that they must ensure their in-store experience is consistent with what they are offering to consumers online, whether that means a more immersive shopping experience, or flexible payment options at checkout.”

Klarna is not the only BNPL provider that wants to increase its physical presence. A few of its competitors have similarly been targeting an expansion into physical retail. Afterpay introduced an in-store BNPL service at selected retail stores last year, and Affirm and Sezzle have recently inked deals with Target to offer flexible in-store payments via Apple Pay and Google Pay. Newer players in the space, such as Upgrade, have also announced similar plans.

The BNPL space is becoming increasingly crowded across finance and tech, with names ranging from Goldman Sachs, Visa, Square and PayPal to Apple, Amazon and Shopify all hoping to benefit from its growing popularity.

Improving offline visibility and providing flexible payment options in-store could be a strategy for BNPL firms to differentiate their offerings in an increasingly competitive landscape, according to Gabe Krajicek, CEO of Kasasa, which provides banking and tech solutions to community financial institutions.

“This is a strong strategic move by Klarna, Afterpay and Affirm to stand out from their new competitors,” said Krajicek. “Offering BNPL in-store will help set these firms apart from competing BNPL providers, as point-of-sale means top-of-mind. It’s still early days, but new entrants into the space may follow suit and in-store BNPL could eventually become an industry-wide trend.”

Chris Kronenthal, president and CTO of FreedomPay, says that the pandemic and the accompanying technological advances have caused a fundamental shift in consumer behavior and expectations. In this post-Covid retail environment, point-of-sale is much more than a transaction – it’s a critical piece of the consumer shopping experience. Customers expect greater accessibility and choice when it comes to how, when and where they pay.

“The payments industry is rapidly becoming a technology play,” said Kronenthal. “As customers return to in-store shopping, retailers who install the best tech and deliver more advanced choices at the point-of-sale – such as flexible BNPL options and personalized incentives, offers, and rewards – will end up being the winners.”

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