The surge in BNPL players launching physical cards, once seen as the very antithesis of the movement, is a telling sign of how realities on the ground are reshaping idealistic digital-native models. As Klarna, Zilch, and PayPal expand their offerings to mirror the utility and familiarity of traditional cards, here are three underlying insights that reveal why this trend is not just opportunistic, but strategic:

• Offline Spend is a Blind Spot BNPL Can’t Afford Anymore: With Klarna and Zilch integrating with Visa, BNPL is no longer confined to eCommerce checkouts. Offline retail, still a major spending avenue, is too large a market to ignore. Physical cards bridge that last-mile limitation, enabling tap-to-pay convenience while embedding the BNPL proposition into traditional POS ecosystems.
• User Acquisition and Retention Hinges on Familiarity: Consumers already understand how credit cards work. By introducing physical cards, BNPL players lower the barrier to adoption and tap into ingrained spending behaviors, while layering on their differentiated value propositions. Klarna’s Visa-powered card lets users toggle between “pay now” and “pay later” at checkout; Zilch’s card brings its ad-subsidized BNPL model to over 150M offline merchant locations; and PayPal’s new physical credit card enables in-store BNPL use with added perks like interest-free travel purchases. Each offering meets users where they already are, at the point of swipe or tap while subtly nudging them into their own financial ecosystems.
• BNPL’s Evolution Is Also About Ecosystem Lock-In: Rather than replacing credit cards, BNPL firms are building hybrid rails to entrench users in their ecosystems. These cards are more than payment tools, they’re loyalty mechanisms and engagement anchors for users both online and in-store.

While BNPL may have started as a clean break from legacy finance, these physical card moves reflect a more enduring fintech reality: distribution, scale, and embedded familiarity often outweigh the allure of pure disruption.
As customer acquisition costs rise and unit economics come under scrutiny, even the most novel models tend to align with channels that users already trust and understand. In embracing card rails, BNPL are stepping deeper into mainstream relevance, using familiar formats to drive adoption and embed themselves into everyday spending.