Gap, the American specialty apparel giant behind brands like Old Navy, Banana Republic, and Athleta, has announced the rollout of Klarna’s flexible payment solutions across all its U.S. digital and app-based shopping channels. The move solidifies the position of buy now, pay later (BNPL) platforms in mainstream American retail, matching consumer demand for payment flexibility and fueling continued adoption in a sector approaching $90 billion in global transaction volume for 2025.
Expanding Payment Options for Modern Apparel Shoppers
Effective immediately, U.S. shoppers on Gap, Old Navy, Banana Republic, and Athleta’s websites and apps can choose Klarna’s “Pay in Full” or “Pay in 4” services at checkout. The “Pay in Full” feature enables immediate settlements, while “Pay in 4” lets customers split purchase costs into four interest-free installments, aligning with surging consumer demand for budgeting-friendly options.
“We are excited to offer our customers more choice, convenience, and control by offering a variety of payment options across our portfolio of brands,” Kevin Meiners, head of loyalty and payments at Gap Inc., said in the official announcement.
Klarna’s Chief Commercial Officer, David Sykes, emphasized, “By offering Klarna at checkout, Gap Inc. is giving millions of shoppers the flexibility to shop how and when they want, while also supporting a personalized way to pay.”
BNPL’s Accelerating Adoption—and Its Impact on Retail
According to data cited in the PYMNTS Intelligence report, BNPL usage is rapidly embedding itself in the financial lives of Americans. Adoption is strongest in younger age groups, with almost 25% of consumers aged 25-35 actively using BNPL, while even among those 65 and over, usage exceeds 5%. This cross-generational appeal is shifting how retailers approach both digital and omnichannel experiences.
The impact on conversion rates and average order value is significant: the report found that 43% of consumers would not make the payment or purchase at all if BNPL weren’t available, while another 42% would opt for a cheaper item. These numbers underscore why major retailers like Gap Inc. are making flexible payment choices a focal point of their e-commerce strategy.
Klarna’s Profile Skyrockets with Successful IPO
The timing couldn’t be better for Klarna, which recently completed a successful IPO. Shares rose 15% above the debut price on the first day of public trading, opening at $52 and closing just under $46 after peaking near $57—a testament to investor confidence in the future of BNPL and Klarna’s role in it.
Klarna’s proprietary data shows it now serves 111 million active users and nearly 800,000 merchants across 26 countries. This vast reach and its increasing prominence in U.S. retail make it an ideal partner for large retail groups aiming for mass accessibility and digital-first growth.
Apparel and BNPL: The Perfect Match for 2025’s Consumer
Apparel is one of the leading categories for BNPL platforms due to high purchase frequency and seasonal buying spikes. By integrating Klarna into checkout, Gap Inc. is poised to drive up conversion rates, boost consumer loyalty, and capture sales from budget-conscious and impulse shoppers alike.
Meanwhile, the U.S. BNPL sector is forecast to reach $89.6 billion in transactions for 2025, up almost 20% year-over-year, further accelerated by large brands and high-traffic shopping moments such as holidays and back-to-school seasons.
Looking Ahead
As consumer preferences continue to shift toward financial control and instant digital gratification, retailers unable to meet those expectations could quickly fall behind. Gap Inc.’s move to offer Klarna’s BNPL options across its digital channels is both a reflection of current market realities and a forward-thinking step toward the future of retail.
For American apparel retailers and global digital merchants alike, BNPL partnerships are no longer an option, they’re rapidly becoming the new standard.
