DoorDash is set to enhance its customer experience by partnering with the fintech company Klarna to offer a Buy Now, Pay Later (BNPL) option for users of the food delivery app. This feature allows customers to either pay the total amount upfront, split their payments into four equal installments, or defer payment to a date that suits their financial schedule.

Details of the Partnership

According to DoorDash’s announcement, the BNPL service will launch in the coming months. This move aligns with a growing trend among food delivery services, as competitors like Grubhub and even retailers such as Walmart have already integrated similar payment options. The shift comes during a time when many Americans are hesitant to apply for traditional credit lines, as highlighted by recent data from the New York Federal Reserve.

Research indicates that as of February, 8.5% of potential borrowers, the highest rate since tracking began, chose not to pursue credit due to fears of denial.

The Rise of Buy Now, Pay Later Services

BNPL services have gained significant traction, especially during the pandemic, providing consumers an interest-free method to finance a range of purchases—from clothing to travel. This service promotes easier access to funds for consumers seeking flexibility in budgeting. David Sykes, Klarna’s Chief Commercial Officer, noted that this partnership marks a major milestone in the company’s efforts to expand into everyday spending categories.

Concerns About BNPL

Despite their popularity, some BNPL providers have faced scrutiny regarding customer service and transparency, particularly when it comes to handling disputes and returns. The Consumer Financial Protection Bureau has initiated regulatory actions in response to complaints received in 2024.

Consumer advocacy groups like Consumer Reports have urged caution among shoppers utilizing BNPL services, warning of potentially high interest rates and fees associated with certain loans.

Klarna’s Position in the Market

Klarna has defended its business model, asserting that it does not charge interest and relies heavily on timely payments from its users. The company claims that it maintains a high repayment rate—99%—by restricting further deferrals for customers who miss payments. The average debt for a Klarna user is approximately $100.

As Klarna prepares for its anticipated initial public offering, this collaboration with DoorDash positions it strategically within the expanding market of consumer financing solutions. Established in 2005, DoorDash currently partners with over 675,000 merchants across 26 countries, further solidifying its role in the delivery services sector.