People Can Now Use Klarna For Their DoorDash Orders — ’If You Have A Payment Plan For A McFlurry, You’ve Lost The Plot’
The news has sparked a heated debate about the predatory practices of BNPL companies.
Dean Drobot | Canva Pro If you needed yet another indicator that the American economy is not doing so great, to say the least, look no further than the news that food delivery app DoorDash will now accept Buy Now, Pay Later, or BNPL payment plans. The announcement has struck many as downright dystopian and has led to warnings about the predatory practices of BNPL apps.
People can now use Klarna for their DoorDash orders as the BNPL firm prepares to go public.
Klarna, the Swedish fintech company that has become one of the best-known "buy now, pay later" apps, which allow online purchases to be paid in installments, recently announced that it has partnered with DoorDash to offer installment plans on the app.
The announcement comes just as Klarna filed an IPO to become a publicly traded company on the New York Stock Exchange, and many have speculated that the DoorDash deal is an effort to juice its stock price once the IPO goes through.
Klarna's DoorDash deal has sparked outrage online, with many calling it predatory.
It's hard not to feel like the very notion of breaking a $15 burrito into four monthly installments is downright dystopian. In a functioning economy, the mere notion of this would be laughable, after all.
Of course, DoorDash has far more products than just takeout. You can buy an entire week's worth of groceries on the app, too, after all. And in today's economy, splitting an order that large will be tempting to all too many cash-strapped people, which is precisely why many are calling the Klarna deal "predatory."
Many see the deal as a way for Klarna to capitalize on the increasingly untenable American economy in a way that could prove disastrous for many consumers who do not understand the kind of trouble that can be caused by the use of BNPL apps, whether for a $20 pizza or a $200 grocery order.
Depending on the app, the installments may come with high interest rates, and exorbitant fees are standard among all apps if a single payment is missed. In many cases, BNPL apps' interest and fees are substantially higher than even a credit card's would be.
Klarna has defended its deal, but 'buy now, pay later' apps are already fueling a debt crisis.
The backlash to Klarna's DoorDash deal clearly reached its CEO, Sebastian Siemiatkowski, who defended the deal in a post on X. The company also posted a lengthy blog post on its website over the weekend in which it presented its service as doing consumers some kind of solid.
"This partnership is an opportunity to empower customers with maximum choice and control over how they pay," the blog post read. It claimed that 99% of its loans are paid in full and on time without interest because the company is choosy about to whom it will loan money.
Unless Klarna is a charity simply doing consumers a solid, that rosy explanation doesn't hold much water. Klarna has to make money somehow, and like its competitors, it does so with fees tacked on if even a single payment is late, as well as interest in some cases. For most BNPL services, those interest rates are exorbitant, rising as high as 36%. Many charge fees for simple things like changing a payment date, too.
Most BNPL apps also report users to credit bureaus for any deviation from the payment plan they took on. And some economists say the "phantom debt" created by BNPL loans is creating a crisis not just for consumers but for the American economy in general.
For something as small as a DoorDash order, it probably seems like these concerns are overwrought. But in an economy in which employment is insecure and the majority of people are a single missed paycheck away from homelessness, it is incredibly easy for a mishap to disrupt these payment plans, resulting in a wave of cascading fees and interest charges that can turn a simple $50 takeout order into hundreds of dollars and a hit to your credit rating.
This is likely why Klarna is doing this in the first place. It knows that the economy is such a mess that the likelihood of this happening with an incredibly lucrative frequency is high — and only likely to rise given the ever-growing economic uncertainty in our country at the moment.
It's not a coincidence that the announcement resulted in lots of jokes about "collaterized DoorDash obligations," a reference to the wildly lucrative 2000s-era "collateralized debt obligation" investments based on predatory subprime mortgages that caused the 2008 Great Recession — and lined the pockets of hedge funds in the process.
Long story short: Don't fall for Klarna and DoorDash's "empowerment" nonsense, and make a PB&J instead. The risk of an installment-plan burrito isn't worth it, and take it from someone who thankfully didn't fall for the okey-doke of being offered a mortgage for a house on a minimum-wage salary back in the 2000s — Future You will thank you for your good sense.
John Sundholm is a writer, editor, and video personality with 20 years of experience in media and entertainment. He covers culture, mental health, and human interest topics.