We’ve reported on many indications of a faltering US economy being propped up by debt, but our latest entry is particularly emphatic: DoorDash has inked a deal with Klarna that will let cash-strapped consumers pay for restaurant food, groceries and other delivery orders in four equal, interest-free installments, or “at a more convenient time, such as a date that aligns with their paycheck schedules.”
Buy Now, Pay Later (BNPL) arrangements have surged in recent years. However, what began as a reasonable accommodation for large purchases like appliances and furniture has now metastasized to a point where Americans can finance Friday-night-pizza impulse-buys.
Klarna derives more than 60% of its revenue from fees paid by merchants who offer the financing option to their customers, with those fees potentially ranging from 1.5% to 7% of the purchase price. With some merchants, Klarna and other BNPL-facilitators also earn interest on long-term credit plans stretching out to upwards of 36 months.
However, Klarna also has a chance to earn money from consumers who take the interest-free, four-equal-installments plan — in the form of late fees of up to $7 per missed payment, up to 25% of the purchase price. For the financially disorganized or imminently insolvent, the interest-free option could prove to be a siren song that leaves their cash flow dashed against the metaphoric rocks of unexpectedly expensive burritos and Kung Pao chicken.
what do you mean you have $11k in “doordash debt” pic.twitter.com/pu1h8GqdZg
— adam 🇺🇸 (@personofswag) March 20, 2025
Even for those who make timely payments, the interest-free option can have a destructive effect over time, by encouraging consumers to commit to spending more money than they would in the absence of the appealing, “interest-free” enticement. Indeed, that’s one of the essential attractions for DoorDash and other merchants who choose to partner with the likes of Klarna:
According to research from RBC Capital Markets…online BNPL offerings boosted average ticket sales by 30% to 50% and increase the share of customers who ultimately made a purchase. — CNN
“The problem is these things start having a very pervasive and very negative influence on people who can’t afford it,” Anish Nagpal, an University of Melbourne marketing professor who studies behavioral decision-making, told the Washington Post. “They just want something now, and they go into this spiral of debt and always trying to chase up and meet the payment requirement.”
In 20 years democrats will be campaigning on DoorDash loan forgiveness
— Dr. Richard Harambe (@Richard_Harambe) March 21, 2025
Naturally, Klarna Chief Commercial Officer David Sykes tried putting a different spin on things:
“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.”
We must ask: Is it ever “smarter” to finance a sandwich?
News of the DealDash BNPL arrangement comes against a backdrop of steadily rising consumer debt and signs that Americans are increasingly unable to keep up with their obligations. The New York Fed’s latest quarterly report found that total household debt increased by $93 billion in 2024’s fourth quarter, pushing the total over $18 trillion. Warning lights are flashing:
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The share of subprime auto borrowers at least 60 days past due hit 6.56% in January, the highest percentage since Fitch Ratings began collecting data in 1994.
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The percentage of credit card holders making only the minimum payment hit 10.75% in Q4 2024, the highest-ever reading in a Philly Fed data series that goes back to 2012.
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The share of 30-day-delinquent credit-card balances hit 3.52%, more than double the pandemic-era low reached in Q2 2021.
After the Doordash-Klarna news broke, social media memesters had an absolute field day:
So then they securitized all the DoorDash loans and sliced them into tranches to sell off to the banks
Rating agencies were slapping AAA on Chick-fil-A orders for credit scores under 500 who didn’t leave a tip pic.twitter.com/sa3YKIqLhw
— Max Gagliardi (@max_gagliardi) March 21, 2025
John, the name of the company is DoorDash. Through a partnership with Klarna, they’ve just unlocked interest-free structured liquidity for high-frequency sustenance transactions. You can finance a carne asada burrito over 4 easy payments, or even defer the charge until payday. https://t.co/VUFounWDTq pic.twitter.com/fzS2iV0RzX
— Adam Singer (@AdamSinger) March 20, 2025
how i walk up to my doordash driver after tipping $0 on the 18 McGriddles i just financed https://t.co/u4ZyZSN0gZ pic.twitter.com/SJiyxZAOEt
— Frosty ❄ (@I_Frosty_) March 21, 2025
“so you financed a $5.29 McChicken on DoorDash but still remain bullish on the economy?” pic.twitter.com/c57aVqbVC0
— Boring_Business (@BoringBiz_) March 21, 2025
“They’re called DoorDash Default Swaps.” pic.twitter.com/rX5ZDGfIEa
— Multifamily Madness (@MultifamilyMad) March 21, 2025
“So we take these DoorDash loans, combine them, and create a whole new instrument where investors can bet on whether borrowers will pay off their Taco Bell Crunch Wrap Supreme within 12 months” https://t.co/cwU484agrg pic.twitter.com/0JBwy8FAfd
— Dr. Parik Patel, BA, CFA, ACCA Esq. (@ParikPatelCFA) March 20, 2025
DoorDash debt collection outside your door because you missed a Chipotle payment https://t.co/pJdr2frU5u pic.twitter.com/LvGS99fdz9
— Archer, Leader of the Gorgonites (@RollxTidexTee) March 20, 2025
the year is 2038 and you owe $50,000 of burrito debt to doordash but you can pay it all off by living in mr beasts minivan for 80 days
— Zack Voell (@zackvoell) March 21, 2025
You are telling me these loans are backed by consumers who ordered burritos on DoorDash? pic.twitter.com/hU76On8Y5N
— Boring_Business (@BoringBiz_) March 21, 2025
Me tipping the DoorDash driver $150 cuz it’s on Klarna’s tab pic.twitter.com/oo05X2sHWM
— Phella (@iamphella) March 20, 2025
The delivery guy watching me sign a 6-year financing deal for my double cheeseburger pic.twitter.com/03KtqAylj0
— piet (@piet_dev) March 21, 2025
“What do you mean your orders? We’re talking about one DoorDash order, aren’t we?”
“I had three. A burger from Five Guys, fries from McDonalds, and a 20 ounce Slurpee from 7/11.” pic.twitter.com/kuDJj6NazJ
— the prince with a thousand enemies ♂️ (@jaketropolis) March 20, 2025
“Alright, so DoorDash makes money whenever any of you orders food instead of cooking. But the problem is, some of you are so broke, you can’t even afford that. You don’t have $15 for a burrito. Which, obviously, means you should just not get the burrito, right?” https://t.co/PCUfJVSJuZ pic.twitter.com/jQG9l0gOBW
— Poe’s Law, Esq: Poe’s Lawyer (@dyingscribe) March 21, 2025
Excited to announce that I closed on a $31.38 transaction to secure a burrito and side of chips
20-year senior fixed rate financing was provided by Klarna
DoorDash provided delivery of the asset
Congratulations to all involved pic.twitter.com/u0DPMHlS8K
— Chase Passive Income (@chasedownleads) March 20, 2025
Tyler Durden
Sat, 03/22/2025 – 15:45
