DoorDash recently announced a partnership with Klarna, a Buy Now, Pay Later (BNPL) service, allowing customers to split payments for food, groceries, and other essentials into smaller installments. While this may seem like a convenient option, it sets a dangerous precedent for financial health by encouraging debt for everyday expenses. This partnership highlights a growing trend where BNPL is creeping into daily spending habits, which increases financial risk. When people start using BNPL for non-discretionary purchases like food, they are essentially borrowing to survive – a practice that could have long-term negative effects on personal finances.
How Klarna and DoorDash’s ‘Buy Now, Pay Later’ Works
With Klarna, DoorDash customers can now choose to “Pay in 4” or “Pay Later” when ordering through the app. This means a $40 takeout order can be split into four payments of $10 over time. Klarna and DoorDash are promoting this as a way to “make life easier” by providing flexible payment options for food, groceries, and convenience store items.
The Problem with BNPL for Essentials
BNPL services are typically used for larger, non-essential purchases like electronics or clothing. Encouraging people to finance basic needs like food and groceries is dangerous because it blurs the line between manageable spending and accumulating debt for survival.
- Ongoing expense problem: Food and groceries are not one-time purchases – they’re recurring needs. Financing essential expenses creates a snowball effect where people are constantly paying off last week’s meals while trying to afford this week’s groceries.
- High default rates: Klarna and other BNPL providers have seen increasing default rates, especially among younger consumers. Unlike a missed credit card payment, which can result in a fee, missed BNPL payments can damage credit scores and lead to collections.
An Incentive to Encourage Overspending
The ability to break down payments makes it easier for consumers to justify larger orders or additional items. DoorDash’s algorithm already promotes upselling – adding Klarna to the mix will likely lead to increased order sizes and spending beyond what consumers can realistically afford.
Psychological Impact of Splitting Payments
Splitting a payment into four parts reduces the perceived cost of an order. A $40 meal doesn’t feel like a $40 expense when it’s broken into $10 chunks over time. This distorts financial decision-making and leads to higher spending.
Long-Term Consequences
By normalizing debt for basic needs, DoorDash and Klarna are contributing to a larger financial instability crisis. The average American household already carries over $6,000 in credit card debt – adding BNPL debt for groceries and takeout could push many people over the edge.
Conclusion
The Klarna-DoorDash partnership promotes convenience at the expense of consumer financial health. Borrowing money to eat is not a sustainable financial practice, and encouraging this behavior will likely lead to increased debt, financial stress, and greater default rates. The convenience of splitting payments for food might seem helpful in the short term, but in the long run, it creates more financial instability and contributes to a growing debt crisis.
