Fast Food on Credit? DoorDash’s BNPL Sparks Concern

DoorDash is diving into the “Buy Now, Pay Later” (BNPL) arena, partnering with Klarna to offer users installment payment options for their takeout. This move raises eyebrows among economists who worry about the increasing reliance on credit for everyday expenses.

Soon, DoorDash customers will be able to split their orders into four interest-free payments or even delay payment to coincide with their paychecks, thanks to Klarna. This partnership taps into the growing popularity of BNPL services, joining the ranks of Affirm and Apple.

While BNPL can be convenient, critics caution about its potential pitfalls. The ease of access to credit, coupled with limited regulation, raises concerns about Americans accumulating unsustainable debt. Adobe reported a record $18 billion spent through BNPL during last year’s holiday season, highlighting its increasing prevalence, particularly among younger consumers.

Merchants benefit from BNPL through increased sales, but they incur fees ranging from 1.5% to 7% per transaction. RBC Capital Markets research suggests that BNPL can boost online sales significantly.

Recent data indicates a concerning trend of rising household debt. A New York Federal Reserve report revealed that overall debt reached $18.04 trillion last year, with a growing number of households falling behind on auto loan and credit card payments.

Klarna’s partnership with DoorDash comes as the fintech company prepares for a potential IPO on the New York Stock Exchange, building on a 24% revenue surge in 2024 driven by the BNPL boom.

DoorDash’s expansion into BNPL extends beyond food delivery, encompassing larger purchases through partnerships with retailers like Best Buy and Home Depot.

Related terms: Buy Now Pay Later, DoorDash, Klarna, Debt, Personal Finance, Economy