Partnership Expands From Online Checkout to Physical Retail
Klarna has expanded its partnership with fashion retailers GARAGE and DYNAMITE, bringing its payment options into more than 300 physical stores across Canada, the United States and the United Kingdom.
Customers at all GARAGE and DYNAMITE locations across the three markets can now use Klarna at the checkout, extending a service that was already available through the brands’ online stores.
Rather than requiring a traditional point-of-sale integration that places a separate payment button on the card terminal, the system uses a QR code.
Shoppers scan the code with their smartphones at checkout and complete the transaction through the Klarna app. Depending on eligibility and the options available in their market, customers can pay for the purchase in full or divide the cost into interest-free installments.
The rollout gives Groupe Dynamite, the Canadian company behind GARAGE and DYNAMITE, a more consistent payment experience between its websites and physical stores.
“Great checkout shouldn’t stop at the browser,” said Lisa Robinson, Klarna’s head of partner success for the U.S. East Coast and Canada.
She said GARAGE and DYNAMITE customers would now have access in stores to the same payment choices they already use online.
Stacie Beaver, president and chief operating officer of Groupe Dynamite, said the expansion was designed to provide more flexibility at checkout while keeping the shopping experience consistent across physical and digital channels.
The timing also puts the service in stores ahead of the important fall and holiday shopping seasons, when fashion retailers typically see increased consumer spending.
The two companies have a relationship extending back several years. Groupe Dynamite introduced installment payments for its GARAGE and DYNAMITE ecommerce customers in Canada in 2020 through PayBright, while Klarna supported similar functionality for the retailer in the U.S. PayBright was subsequently acquired by Affirm.
The latest agreement moves the Klarna relationship deeper into physical retail at a time when Groupe Dynamite itself is expanding internationally.
GARAGE has been growing its U.S. footprint and recently entered the UK, including locations at Bluewater Shopping Centre and on London’s Oxford Street. The company is also planning additional large stores in major U.S. shopping districts, including a new flagship in Manhattan’s Flatiron District scheduled for 2027.
Groupe Dynamite opened five stores during the first quarter of 2026, including three GARAGE locations in the U.S. and two in the UK. The retailer reported revenue growth of 37% during the quarter, while adjusted EBITDA increased more than 70%.
For Klarna, the partnership fits into a broader effort to make its payment products available beyond ecommerce.
The company has spent years building its business around online checkout, where buy now, pay later became widely adopted as an alternative to credit cards. It has increasingly been extending that model into physical stores as consumers return to shops while expecting many of the payment choices they became accustomed to online.
Klarna said earlier this year that its network covered more than 120,000 physical stores globally. The company had more than 118 million active consumers and more than 1 million merchant partners as of March.
Fashion remains an important part of that strategy.
Klarna has expanded its relationship with H&M into additional European markets this year and has worked with department stores and luxury retailers to make flexible payment products available across more shopping channels.
The move into GARAGE and DYNAMITE stores demonstrates how Klarna can extend an existing ecommerce partnership without requiring consumers to adopt an entirely different payment experience when they visit a store.
For the retailers, the appeal is similar. A shopper who already uses Klarna on a GARAGE website does not have to return to a credit card simply because the purchase is taking place at a physical checkout.
The QR-code approach also gives Klarna a way to insert its app into an in-store transaction while keeping much of the payment experience on the customer’s own phone.
That could become increasingly important as BNPL providers compete not simply to appear as another checkout option online but to become payment networks consumers use wherever they shop.
BNPL Is Moving Beyond the Online Checkout Button
The significance of the GARAGE and DYNAMITE rollout is not really the addition of another 300 stores to Klarna’s network.
It is that buy now, pay later companies increasingly want the distinction between online and offline payments to disappear.
BNPL grew quickly because ecommerce gave it the perfect environment. A customer was already looking at a screen, so inserting another payment button beside Visa, Mastercard and PayPal was relatively easy.
Physical retail is more complicated.
Card terminals are already fast and familiar. A customer can tap a card or phone and finish a purchase in seconds. Asking that person to open another application, scan a QR code and select a financing option creates additional steps.
That means Klarna has to offer something valuable enough to justify the extra interaction.
For someone who wants to spread the cost of a larger clothing purchase, that value is obvious. The customer receives access to installment payments at the moment they are deciding whether to complete the purchase rather than having to rely on a conventional credit card balance.
That can also benefit retailers.
Fashion purchases are particularly sensitive to basket size. A shopper may like several items after trying them on but decide that paying for everything at once is too expensive. Installments can reduce the immediate financial hurdle and potentially keep more items in the basket.
But that is also where the commercial attraction of BNPL meets the consumer-risk debate around it.
Splitting a purchase into smaller amounts changes how expensive the transaction feels without changing its total price. A $200 purchase divided into several payments may feel easier to manage than spending $200 immediately, even though the underlying obligation remains the same.
Adding BNPL directly to fitting-room-driven retail could make that psychological effect stronger.
The challenge for Klarna is therefore to make in-store financing convenient without making borrowing feel invisible.
There is another strategic reason the physical expansion matters.
Klarna is no longer trying to be merely the company that finances purchases on merchant websites. It increasingly wants a direct financial relationship with consumers through its app, cards and banking products.
QR-based in-store payments support that goal because they bring the customer back into the Klarna app rather than leaving the entire transaction to the retailer’s payment terminal.
Every additional physical merchant makes that app more useful.
For Groupe Dynamite, meanwhile, the partnership supports a broader omnichannel strategy as GARAGE expands across the U.S. and into the UK. A customer can discover an item online, try it on in a store and still access the same type of payment plan.
That consistency is becoming more important as the line between ecommerce and physical shopping becomes less meaningful to consumers.
The bigger question is whether shoppers actually want BNPL frequently enough in stores to change their checkout habits.
Tap-to-pay is difficult to beat on speed. Klarna does not need to replace it for every transaction, however. It only needs to become useful at moments when customers want more flexibility than an ordinary debit or credit card provides.
That makes fashion a logical testing ground.
If Klarna can make flexible payments feel as natural at a store counter as they already do on a website, BNPL’s next growth phase may come less from adding more online checkout buttons and more from following consumers back into physical stores.