Doordash and Klarna join forces to force users to pay for meal delivery on installment loans, calling it “essential to meet customer needs.” Not everyone sees it that way.
The announcement has sparked a surge in criticism of social media and is less directed at businesses themselves than questioning the need to use “buy now, pay later” services.
“Eat now and pay later? A credit apocalypse is coming,” X user wrote when the partnership was announced on Thursday.
Another X-poster used a photo of Dave Ramsey with the appearance of a lorn, captioned, “What does it mean to have $11k on a ‘Doordash debt’?”
Others whipped “Sopranos” memes and quip about “Dualdash’s debt collection outside the door because they missed a payment for Chipotle.”
Economic commentator Karan Scanlon said in a social media video that the deal is another example of a “gambling economy.”
“We have Memecoin, sports bets. We love good villains in the US and can do completely frictionless,” she said. “We don’t even need to wear pants. Add that to you and worry about everything else later.” She added that business models that monetize “impulsivity” as well as convenience “have real winners and losers.”
Klarna, preparing for its first public offering, is one of the BNPL providers that have surged into almost every corner of the consumer economy since the pandemic, including Afterpay, Affirm and Sezzle.
Lightly regulated financial services offer users a variety of ways to pay for their purchases. The most popular ones are usually short-term loans that can be repaid in a few interest-free installments. Companies make money by charging users for late payments or missed merchants due to their ability to offer BNPL loans at checkout.
Doordash said customers can use Klarna not only for delivering small dollar food, but also for many types of purchases on the platform. They can be paid in four installments or later in full on a “date that matches your pay schedule, etc.”
A Klarna spokesman admitted the online pushback, but said that depending on the situation, all forms of borrowing for food purchases are potentially concerning.
“If you’re in a situation where people feel like they have to trust food, that’s a bad indicator for society,” the spokesman said.
Still, many people are making “rational decisions” to manage their money using BNPL services, the spokesman added that the new feature can only be used for at least $35 Doordash purchases. “If high-cost credit cards are accepted, consumers should be able to opt for a zero profit credit product instead.”
In fact, industry-wide data shows that short-term loans have become a daily function of many consumer wallets. The average credit card rate is still close to 20%, especially among young people who are dealing with inflation.
The BNPL explosion coincides with record debt levels and attachment of consumer pessimism. According to the Federal Reserve Bank of New York, total household debt was over $18 trillion at the end of last year, and credit card balances consisted of a record $1.2 trillion. Consumer sentiment fell this month to its lowest level since 2022, and borrowers’ expectations for missing debt payments for the next three months have reached their highest level since 2020, the New York Fed found.
A Doordash spokesman did not comment on criticism of the partnership with Klarna, saying their collaboration “provides even more flexibility, control and options.” The delivery service noted that users can already pay with government assistance, including Venmo and CashApp and SNAP perks. Klarna is already available on grocery delivery platform Instacart, and recently replaced the affirmation of rivals as Walmart’s exclusive BNPL partner.
Many of the concerns about BNPL have focused on the potential impact on borrowers’ credit history. This does not primarily reflect the use of the Service despite years of discussion with the Bureau reporting credits to change it. However, a survey released last month by AFFIRM and credit scoring company FICO showed that most consumers with five or more AFFIRM loans saw no real downside in their credit scores. And consumers consistently rate BNPL products in their research. Last year, 89% of borrowers told Transunion they were happy with the service or very satisfied.
However, personal finance experts and consumer advocates say the anxiety kicked up by the Doordash-Klarna deal reflects real financial risks.
“If you make four payments to cover three tacos on Tuesday, that sounds complicated,” said Adam Rust, director of financial services for the advocacy group Consumer Federation. “I don’t characterize this as a solution. It’s a fintech innovation that creates problems.”
Not only does users potentially face Klarna’s own deferred fees, but he also said from the bank that “if the customer agrees to repay it on automatic debit, the customer will risk additional overdraft fees.”
Rust also highlighted recent research by the Consumer Financial Protection Agency, either at risk or has been suspended completely as the Trump administration degenerates the institution.
The CFPB recently increased its ability to challenge BNPL customers to receive refunds, but former employees and consumer advocates believe the rule was denied as staff ordered all enforcement activities last month. A trade group representing fintech companies, including BNPL lenders rather than Klarna, sought the Trump administration this month for an exemption from the law that will take effect next week.
Financial planners have long been warning clients of budget stocks from overuse of BNPL. Even some borrowers themselves who spent a lot of weight on their services are beginning to warn others of risk by making it easier for cash-bound users to acquire debts that are difficult to pay off.
“Eat now and pay later is a terrible trap,” wrote Douglas Bournepers, president of Born Fideaux, a millennial-focused advisory firm, in X last week. “If you need to borrow a burrito to deliver it to you, you’re a product. No more.”