Klarna’s new partnership with DoorDash, which allows consumers to order meals from their favorite restaurants and break down the purchase into installments, may have more strategy behind it than meets the eye.
While Klarna is best known for its buy now, pay later services, the DoorDash plan offers multiple payment options, including the ability for consumers to choose a payment date that aligns with their paycheck schedule. In other words, they can buy dinner on Tuesday but wait to pay until they get paid on Friday.
Klarna is betting that this flexibility will be enough to entice consumers to download its app—giving Klarna a foothold in their financial habits.
“It’s about bringing customers into your app and giving them flexible payment options,” said Ben Danner, Senior Analyst of Credit and Commercial at Javelin Strategy & Research. “It seems silly to take an installment loan on a $50 meal purchase, so it’s likely that more customers will choose the deferred payment option. However, it also begs the question, why go through an intermediary for a pay-in-full purchase when they could just pay using a credit card direct to the meal delivery service?”
An Alternative to Credit Cards
Klarna may be positioning itself as an alternative to credit cards rather than just a specialty payment option, according to Danner. Like a credit card, Klarna offers a balance account that earns cashback rewards when used for payments, giving consumers an added incentive to download the app. The service also caters to individuals who may not qualify for credit cards.
While takeout purchases may not incur sizable payments, DoorDash also lets consumers purchase big-ticket items through third-party merchants, such as Best Buy and Home Depot. This could be another area where consumers opt for Klarna’s BNPL services.
Gearing Up for the IPO
Earlier this week, Klarna also became the exclusive provider of BNPL loans for OnePay, the fintech majority-owned by Walmart. This flurry of activity follows Klarna’s filing of its prospectus last week to become a publicly traded company.
“By continuing to integrate with everyday spending categories, Klarna further drives spend into its app ecosystem while enhancing its brand,” Danner said.
For DoorDash, Klarna marks its first BNPL alliance in the U.S., although the service has similarly focused on down-market alliances recently. Indeed, Dollar General recently said it would start accepting SNAP and EBT online payments from DoorDash customers.
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