Is the economy so bad that people will soon need to finance … fast food?
DoorDash (NASDAQ: DASH) and Klarna appear to think so. The two companies on Thursday announced a partnership that would allow Buy Now, Pay Later for food delivery — a domain where immediate payment has traditionally been standard. The BNPL model has more typically been larger purchases like furniture or electronics.
The financing option particularly attracts younger consumers seeking to stretch limited finances, despite concerns from economists and consumer advocates about lack of transparency and limited regulatory oversight.
The BNPL sector has grown substantially in recent years. Adobe reports BNPL usage hit record levels during last year’s holiday shopping season, generating over $18 billion in online spending — a nearly 10% increase year-over-year. It is projected to exceed $160 billion within seven years.
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BNPL providers charge merchants between 1.5% and 7% per transaction, according to Kansas City Federal Reserve research. Many retailers accept these fees as RBC Capital Markets research shows BNPL offerings can boost average sales by 30% to 50%.
Meanwhile, Americans face rising debt levels, with the Federal Reserve Bank of New York reporting household debt increased to $18.04 trillion last quarter. Serious delinquencies on auto loans and credit cards have reached 14-year highs.
Information for this story was found via CNN, and the sources and companies mentioned. The author has no securities or affiliations related to the organizations discussed. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
