SAN FRANCISCO–Consumer, many of whom are already carrying card debt, can now take out a loan to buy fast food—but after concerns were raised, the company announced the offer would only apply to certain minimum orders.
Klarna, a provider of buy now, pay later (BNPL) financing options said it has entered into an agreement with DoorDash to offer customers a BNPL option when making purchases, which in most cases is for food deliveries.
On DoorDash orders placed online or through its app, customers now have the option of paying for it in four interest-free payments, or at a later date.
Anand Subbarayan, head of money products at DoorDash, said in a statement that flexible payment options were “essential” for the company’s customers as it expands the types of products it delivers.
However, the New York Times noted that after the announcement, concerns spread online that people would use payment deferral for food delivery purchases that can be $10 or $20.
Policy Changes
In response, the Times reported, Klarna said in a blog post that the option to pay in four installments would be available only for purchases over $35. The company also said that it was better for a person to pay $200 for groceries in interest-free installments than to pay for them with a credit card, which could result in fees and interest, it said.
“Because there is no interest, our business model relies on customers repaying us on time, unlike credit cards,” Klarna said in its statement. “So, we conduct a thorough eligibility check before approving a purchase, and if a customer misses a payment, we restrict their use of our services — something credit card companies wouldn’t do, as they profit from late and revolving payments.”
Financing the Pad Thai
But consumer groups have raised concerns.
Chuck Bell, advocacy program director at Consumer Reports, told the Times BNPL loans can be manageable for many people. He advised that these loans should be used selectively, that customers should be aware of when their payments are due and ensure that they have the money to pay the loans back, the Times said.
“If you don’t pay the bill on time and you start getting multiple late fees, it could end up being a very expensive chile relleno or pad Thai,” Bell told the publication.
