Consumers Urged To Use Caution With Eat Now Pay Later Financing

DoorDash is joining the ranks of other food delivery services, such as Instacart, Grubhub, and Uber Eats, offering an Eat Now, Pay Later option.

The company is teaming up with the Swedish fintech company Klarna to offer flexible payment options. When ordering through DoorDash.com or the DoorDash app, customers can choose whether to pay in full right away, pay in four equal interest-free installments, or defer payments to a later, more convenient date, such as corresponding with the customer’s paycheck schedule.

These payment options, known in the industry as Buy Now Pay Later, or BNPL, have become very popular in recent years. During the 2024 holiday shopping season, BNPL usage increased by 10% over the previous year, netting $18 billion in online spending and hitting an all-time high, CNN reported.

These flexible payment options are appealing to cash-strapped consumers who may be unable to qualify for a credit card.

“The share of discouraged borrowers, defined as respondents reporting that they did not apply for any credit because they did not think they would get approved (despite reporting a need for credit), reached 8.5 percent, the highest level since the start of the survey in October 2013,” The Federal Reserve Bank of New York reported for February 2025.

In the past, BNPL services were mainly used for big-ticket purchases, such as furniture, appliances, and similar items. But now, consumers are looking to use BNLP options for smaller purchases. DoorDash is offering the option on purchases of $35 or more.

“As we expand DoorDash’s offerings—from groceries and beauty to electronics and gifts—flexible payment options are essential to meeting our customers’ needs,” Anand Subbarayan, Head of Money Products at DoorDash, said in a news release, adding, “We’re excited to partner with Klarna to enhance the convenience we offer.”

However, Chuck Bell, an advocacy program director at Consumer Reports, urged caution when using BNPL services, as these payment services are often used by people already in debt. Consumers should ensure they know when the payments are due and have the money to repay the loans.

“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 said, per The New York Times.

BNLP providers, such as Klarna, profit by charging the merchant a fee, typically between 1.5% and 7% of the transaction price, according to research from the Kansas City Federal Reserve. However, they also charge fees for late or missed payments, which can be very costly for the consumer.

“People should pay with money they have whenever possible,” Klarna said in a blog post. But when credit is needed, choosing a smarter, more responsible option is important. For decades, Americans have relied on credit cards for grocery shopping—38% of online shoppers prefer them—but this comes at a price. More than half (56%) have paid interest, 42% have faced fees, and 34% have missed payments.”