Affirm, Klarna, deepen ties with Apple

• Key insights: Affirm and Klarna's BNPL loans will now be available for in-store purchases on Apple Pay. 
• What's at stake: The in-store capabilities add to existing e-commerce agreements between the BNPL providers and Apple. 
• Supporting data: Apple Pay is accepted by more than 85% of retailers in the U.S., according to Affirm. 

The U.S.'s two largest buy now/pay later providers have expanded their respective relationships with Apple to bring pay-over-time loans to Apple Pay for in-store purchases. 

The expanded relationships with the tech giant provides another key distribution channel to get BNPL in as many checkout flows as possible. BNPL loans are most common on e-commerce transactions, and providers have been eyeing other distribution channels with retailers to offer short-term installments at the point of sale in stores. 

Starting with Apple's iOS 26, Apple Pay users in the U.S. and U.K. will have access to Klarna's buy now/pay later lending in stores, adding to existing availability for e-commerce purchases. 

In the U.S., shoppers can choose "Pay in 4" for purchases greater than $35, "Pay Later" for full payment within 30 days, financing for monthly payments. In the U.K. options include "Pay in Full," three installments or "Pay Later." 

"This is another big step in making Klarna part of everyday spending for millions of consumers, both on and offline," Sebastian Siemiatkowski, co-founder and CEO of Klarna, said in a release. 

Affirm loans will also be available for in-store purchases on Apple Pay, Affirm separately said. 

"Building on our successful launch that gave consumers access to Affirm when checking out with Apple Pay online and in-apps, we're excited to expand our offering to the in-store payment experience," said Vishal Kapoor, Affirm's senior vice president of product, in a statement. "This gives Apple Pay users in the U.S. added flexibility and transparency at even more checkouts." 

Apple's reach

Apple Pay is accepted by more than 85% of retailers in the U.S., according to Affirm. And over half of U.S. consumers have an iPhone, said Eric Grover, principal at Intrepid Ventures. 

"For Klarna and Affirm having their BNPL offers available to them to finance in-store purchases is huge," Grover told American Banker. 

Bringing BNPL into the in-store environment via Apple Pay also helps to solve for the "clunkiness" of using the BNPL physical card or the BNPL app separately from consumer's everyday payment method, said Ben Danner, a senior at Javelin Strategy and Research. 

"It's a step towards unifying the payment method and making it easier for the consumer to access and use, which is always a win in the payment's playbook," Danner told American Banker. "Apple has built a great payment ecosystem and this play works off of that foundation. BNPL is much more widely used online vs. in-store, and this is a way to encourage in-store use."

For Apple, the addition of in-store BNPL purchases provides another avenue for its customers to interact with its mobile platform, Grover said. 

"Apple doesn't do anything that's not good for Apple," Grover said. "Apple wants its mobile platform to be as central to consumers' lives as possible. Having fee-free short-term consumer credit integrated and available on its platform will increase its value and appeal to Apple users." 

The BNPL battle

Affirm and Klarna have been racing to add more merchants to their platforms. Affirm on Tuesday also said it landed a distribution deal with ServiceTitan, a field service management software designed for home and commercial service businesses, to allow ServiceTItan contractors to offer Affirm to their clients. The company also inked a similar deal with Vagaro, a business management software platform used by beauty, wellness and fitness businesses, to offer Affirm loans in-store and online. 

Klarna also added several high-profile partners ahead of its U.S. IPO. As the Swedish neobank prepared its U.S. listing, it signed several agreements to put BNPL in front of merchants and consumers. A February deal with JPMorganChase extended Klarna's installment options at the point of sale for more than 900,000 businesses, along with other financial services available on JPMorgan Payments' Commerce Solutions Platform. 

Other recent Klarna distribution deals include Adyen, Apple, Staples, Gap, Worldpay and RiteAid. Payment analysts have said building scale through partnerships is key for BNPL lenders, given most consumers are attracted to the BNPL product more than the provider.