DoorDash and Klarna Forge 'Buy Now, Pay Later' Alliance
DoorDash, the US-based delivery service, has formed a partnership with Klarna to offer customers the option to defer payments on orders.
The arrangement will enable customers to access three payment options through Klarna when ordering via DoorDash.com or the DoorDash app, according to the companies.
Service Expansion
DoorDash primarily offers restaurant food deliveries but has expanded to include retail items such as electronics, cosmetics and pharmaceutical products.
In the coming months, DoorDash users will have access to three payment options through Klarna: "Pay in Full," "Pay in 4" and "Pay Later."
Pay in Full allows customers to pay the total amount immediately through Klarna's payment system. Pay in 4 divides the cost into four equal and interest-free instalments.
“Because there is no interest, our business model relies on customers repaying us on time, unlike credit cards”
The Pay Later option enables customers to defer payments based on their personal finances.
Following the announcement, concerns emerged online that consumers might defer payment for relatively small food delivery purchases.
In response, Klarna published a blog post clarifying that the option would only be available for purchases above US$35.
The company also defended its model, stating that paying US$200 for groceries in interest-free instalments is preferable to using a credit card that might incur fees and interest charges.
“Because there is no interest, our business model relies on customers repaying us on time, unlike credit cards,” Klarna states.
“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.”
Expanding Partnerships
Klarna already collaborates with other food-delivery companies, including Instacart and Uber Eats.
The new payment options can be used for the expanding array of products available through DoorDash, including electronics, home improvement supplies and beauty products.
Consumers can also use Klarna's payment solutions for their DashPass Annual Plan, which offers benefits like free delivery and exclusive deals.
“Our partnership with DoorDash marks an important milestone in Klarna's expansion into everyday spending categories.
“By offering smarter, more flexible payment solutions for groceries, takeout and retail essentials, we're making convenience even more accessible for millions of Americans” David Sykes, Chief Commercial Officer of Klarna, says.
“As we expand DoorDash's offerings—from groceries and beauty to electronics and gifts—flexible payment options are essential to meeting our customers' needs,” adds Anand Subbarayan, Head of Money Products at DoorDash.
“We're excited to partner with Klarna to enhance the convenience we offer, including flexible payment options for our DashPass Annual Plan, the most affordable way to order on DoorDash with added streaming and ride benefits at no extra cost.”
The partnership announcement comes as “Dashers” in New York are set to receive a US$16.7m settlement following accusations that the company deceptively used customer tips to subsidise wages between 2017 and 2019, rather than allowing drivers to keep their tips in addition to their guaranteed pay.
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