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

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DoorDash Teams Up with Klarna to Offer Buy Now, Pay Later Option

DoorDash has announced a new partnership with fintech company Klarna, allowing customers of the popular food delivery app to buy now and pay later. This collaboration gives DoorDash customers the flexibility to choose between paying in full, splitting their payment into four equal installments, or deferring payment to a more convenient time, such as aligning with their paycheck.

The buy now, pay later (BNPL) service, set to launch in the coming months, comes at a time when more Americans are hesitant to apply for traditional credit options like credit cards, mortgages, and car loans. According to data from the New York Federal Reserve, the percentage of discouraged borrowers has reached its highest level since 2013, with 8.5% of individuals reporting a need for credit but not applying out of fear of rejection.

BNPL services have gained popularity among consumers as a convenient and interest-free way to make purchases across various categories, from clothing to travel. The surge in BNPL usage during the pandemic has fueled an online shopping boom, making it a preferred payment option for many shoppers.

David Sykes, Chief Commercial Officer of Klarna, sees the partnership with DoorDash as a significant milestone in expanding Klarna’s presence in everyday spending categories. This collaboration marks Klarna’s commitment to offering innovative payment solutions to consumers across different industries.

While BNPL services have been praised for their convenience, some providers have faced criticism for their handling of disputed charges and returned items. Consumer watchdogs have raised concerns about high interest rates and fees associated with certain BNPL loans, prompting regulatory action by the Consumer Financial Protection Bureau.

In response to these concerns, Klarna has defended its business model, emphasizing that it does not charge interest and relies on timely payments from customers. The company’s strict repayment policies ensure that the vast majority of its lending is repaid, with only a small percentage of users defaulting on payments.

As Klarna prepares for an IPO, the partnership with DoorDash showcases the company’s commitment to expanding its reach in the market. With a global presence and a wide network of merchants, Klarna continues to offer innovative financial solutions to consumers worldwide.