DoorDash and Klarna partner to offer an eat now, pay later plan

DoorDash and fintech company Klarna are joining forces to offer customers of the food delivery app the option of buying now and paying later.

DoorDash customers will have the option either to pay in full, to pay in four equal installments or to postpone payment to “a more convenient time, such as a date that aligns with their paycheck,” DoorDash said Thursday in a news release.

Deferring payments as a service for food purchases is increasingly widespread, and already offered by DoorDash rival Grubhub, as well as Walmart shoppers and those who bank at J.P. Morgan Chase. 

The buy now, pay later (BNPL) service, to be launched in the coming months according to the announcement, comes amid an economic climate that has more Americans reluctant to apply for credit card, mortgage and car loans, data published on Monday by the New York Federal Reserve shows. 

Discouraged borrowers — those who reported needing credit but not applying for fear of being denied — reached 8.5% in February, the highest since the Fed began its tracking in 2013.

Welcomed by shoppers as an interest-free way to make purchases, from clothing to travel, BNPL loans let borrowers pay over time. Usage of BNPL services surged during the pandemic, helping drive an online shopping boom. 

The pact with DoorDash marks a “milestone in Klarna’s expansion into everyday spending categories,” David Sykes, the company’s chief commercial officer, stated.

Yet some BNPL providers drew complaints of giving customers the runaround in cases of disputed charges or returned items, prompting regulatory action by the Consumer Financial Protection Bureau in May of 2024.

Consumer Reports is among the advocates warning shoppers to be on guard against buy now, pay later loans, saying some come with high interest rates and fees. 

Klarna defended its business model in a blog post, saying because it does not charge interest, it relies on customers paying on time, as opposed to credit cards. Those who miss payments are cut off from deferring more, a practice that leaves 99% of its lending repaid, it said. Its average user owes the company $100.

The deal with DoorDash comes as the Swedish company readies an IPO. Founded in 2005, the food delivery and takeout platform partners with 675,000 merchants in 26 countries.