DoorDash and Klarna partner to offer an eat now, pay later plan
DoorDash and financial startup Klarna are collaborating to provide meal delivery app consumers the option of ordering now and paying later.
DoorDash customers will be able to pay in whole, in four equal payments, or postpone payment to "a more convenient time, such as a date that aligns with their paycheck," according to a news release issued Thursday.
Buy Now, Pay Later (BNPL) businesses, which include Affirm and Apple, have grown dramatically in recent years. However, many economists and consumer activists argue that the widespread usage of these services, along with a lack of transparency and regulatory monitoring, raises concerns about how much debt Americans are truly incurring.
Shoppers welcome BNPL loans as an interest-free option to buy purchases ranging from apparel to travel. Borrowers can pay over time. BNPL services were in high demand during the epidemic, contributing to a rise in internet buying.
The agreement with DoorDash is a "milestone in Klarna's expansion into everyday spending categories," said David Sykes, the company's chief commercial officer.
However, several BNPL suppliers received complaints for giving clients the runaround in situations of disputed charges or returned merchandise, triggering regulatory action by the Consumer Financial Protection Bureau in May 2024.
Consumer Reports is among many caution buyers to be wary of buy-now, pay-later loans, claiming that some include hefty interest and fees.
Klarna defended its business strategy in a blog post, claiming that because it does not charge interest, consumers pay on time, unlike credit cards. Those who skip payments are barred from delaying further installments, a procedure that ensures repayment of 99% of its financing, according to the company. The typical consumer owes the corporation $100.
Klarna's agreement with DoorDash comes as the company continues to expand its products in preparation for its IPO on the New York Stock Exchange in the coming weeks. Last week, the Swedish fintech business announced a 24% increase in 2024 sales, capitalizing on the BNPL frenzy, which is expected to reach $160 billion over the next seven years.
In addition to food delivery, DoorDash allows customers to purchase high ticket products from third-party retailers such as Best Buy and Home Depot.
