Klarna, the BNPL providers has supposedly signed a deal with Doordash. This means now you can buy a taco of $7 and pay it over over 3 months. The internet is full of memes around this. However, this deal is important. As fintech experts we can explain to you what it means and why it matters.

BNPL providers like Klarna issue instant loans that you can pay over time. In some sense they are same as credit cards but they give their customers longer than 1 month to pay the bill without any interest. Customers arguably also have less consumer protection through BNL as chargebacks etc. could be either hard or impossible.

The hardest part for these BNPL companies is getting customers to signup. Post signup these companies want to know more about your credit history, your purchase habits etc.

Doordash like companies sell low value items to consumers and intuitively you might think that these are not candidate for BNPL purchases. While your intuition is right, you are missing another big point.

While doordash is low value it is a high volume ecommerce which means people order on Doordash often. Every time they order they have to select payment option and they end up seeing the BNPL company’s name. This gives brand visibility. Secondly, BNPL company can give offers such as get $10 off your first order. Even if you are just ordering $12 Butter chicken, now it could cost your $2. You might be willing to signup just to get that $10. Once you signup BNPL company has your data. This helps them target you on other platforms.

Doordash - Klarna deal will have fine print that benefits both Doordash and Klarna. We will not know all the details so soon but the deal is certainly smart and I an see the benefit for everyone in it. It is not about food being expensive.