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DoorDash Offering Payment Plans for Food Delivery Sparks Backlash

44 points by ferguess_k 2y ago

lm28469 2y ago
Between that and many "banks" offering you to "invest" in crypto straight from their mobile apps home page... it seems like they're trying to milk whatever is left in the pockets of the bottom tier Debt is a powerful tool when used by educated people for legit reasons, buying a new TV or chicken wings isn't one of them.
- brianmcc 2y ago
  Agree re chicken wings but there are plenty of reasonable and responsible credit options for spreading payments for a relatively unusual purchase - at least, not a daily or weekly necessity - like a TV
  - account42 2y ago
    Not really - for something like a TV you can wait or get a more modest model. And if waiting would take too long then it's probably not a reasonable expense for you.
    - fireburning 2y ago
      i get the vibe from this comment you probably believe all poor people are poor because of their spemding habits :)
      - ohnoitsahuman 2y ago
        Depends. If your poor in America, then spending is often part of the equation. If your poor in India then perhaps not.
      - elicksaur 2y ago
        There are obviously external forces that contribute to anyone’s circumstances rich or poor. But, ultimately, you can only spend as much as you make in income, or go bankrupt. Choosing to tack on an interest payment to your costs is often an unnecessary additional cost for people. That’s true if you’re poor buying a rudimentary TV or rich maxing out credit cards to furnish your mansion.
    - brianmcc 2y ago
      Sorry no but domestic white goods such as TVs, fridges, laundry appliances, etc are the perfect use case for small credit plans where doing without or "saving up" is a poor alternative, and sensible non-extortionate credit options have been around for literally decades for this reason.
  - palmotea 2y ago
    > Agree re chicken wings but there are plenty of reasonable and responsible credit options for spreading payments for a relatively unusual purchase - at least, not a daily or weekly necessity - like a TV That stopped being true a long time ago, at least in the US. TVs can be had incredibly cheaply nowadays. A quick Amazon search shows many models available for circa $100. That's like less than a dozen fast food meals. If you need a TV, save your money and buy one you can afford. A predatory payment plan should not be used.
    - brianmcc 2y ago
      OK but US really is in a world of its own these for a lot of things. In the UK it's very common to get 0% interest installments. Which is not to have a go at the US, but to just make the point that buying domestic appliances is not a simple "bad credit" case. Unlike chicken wings.
- fireburning 2y ago
  man that's the engine of modern day slavery or commonly referred to by the players of the game as the trap :)
- asow92 2y ago
  Since we're already dealing in absurds here, what if one were to Doordash 50 servings of wings as a emergency/backup catering option for a banquet or wedding? That could easily top $500-800. I sure some consumers—including financially secure ones—would appreciate an interest free loan option on that. Obviously there is also the opposite dark and pessimistic take here, but there are potentially good things as well?
  - ceejayoz 2y ago
    A financially-secure person can put it on their credit card, and pay no interest because they always pay their full statement balance. Someone who can't probably shouldn't be spending $800 on wings.
    - gruez 2y ago
      >A financially-secure person can put it on their credit card, and pay no interest because they always pay their full statement balance. klarna offers a 4 equal interest free payments option. How that any different from a credit card?
    - fireburning 2y ago
      im all for let us poor brokies do what we want
    - asow92 2y ago
      As a financially secure person, why would I want to spend $800 today when I can spend $800 over four months with no penalty? It doesn't make any sense in the slightest, that is unless you're not savvy enough to keep track of your money?
      - ceejayoz 2y ago
        Klarna is four payments over eight weeks. That's about the same float as a credit card, which can be up to 60.
        2y ago
- dialup_sounds 2y ago
  I got a similar vibe from RobinHood adding sports prediction markets.
  - xp84 2y ago
    I highly approve of the acknowledgment of both of those types of gambling being treated as one thing.
    - drivingmenuts 2y ago
      I trust both entities equally. Which is to say: not at fucking all.
- NoMoreNicksLeft 2y ago
  >Debt is a powerful tool when used by educated people for legit reasons, Debt is a dangerous tool when used carefully and intelligently. When used carelessly or unintelligently it is a ruinous monster. We live in a world that allegedly is more educated than ever, but I don't think education is sufficient to avoid this pitfall.
coldcode 2y ago
"I'll gladly pay you the next four Tuesdays for a hamburger today" does seem like a bad economic concept.
comrade1234 2y ago
It’s not a bad strategy as a consumer if you order a lot of fast food through DoorDash. It’s an interest-free loan and you might just die before you have to pay it off.
- rchaud 2y ago
  Wouldn't count on that sticking around, I remember when these apps used to market "no tipping" as a feature. Now there's a giant tip screen front and center in the UI for completed orders.
  - zhoujianfu 2y ago
    In their defense, DoorDash always had a giant tipping screen… it’s just that they used to steal it from their drivers.
yurishimo 2y ago
This is a fundamental misalignment between a business and their customers. The business doesn’t care if the customer can actually afford the product and they’re happy to push off that responsibility to credit card companies or Klarna in this case, but it’s so shortsighted because anyone with two braincells knows that if your customer cannot afford a <$50 purchase without debt, that they can’t afford that thing at all. In the long run, customers who should have been blocked from purchasing due to lack of funds will instead write bad reviews about their experience being sent to a collector over a cheeseburger and they’ll bounce off your platform. “Short term profits ruin everything” for 200 Alex!
- gruez 2y ago
  >This is a fundamental misalignment between a business and their customers. The business doesn’t care if the customer can actually afford the product and they’re happy to push off that responsibility to credit card companies or Klarna in this case, but it’s so shortsighted because anyone with two braincells knows that if your customer cannot afford a <$50 purchase without debt, that they can’t afford that thing at all. Accepting credit cards theoretically allows businesses to sell to customers that don't have the money. Is this bad, and should we chastise businesses for not limiting themselves to debit payments only?
  - trollbridge 2y ago
    Credit cards have some brakes because they only extend credit to people they think will pay it back. Klarna’s marketing pitch is “no credit check”. They then just send an automated ACH to your bank account. If the funds aren’t there they send it over and over, hoping to punish you with returned-payment fees or overdraft fees. It’s quite different than a credit card and significantly more predatory. (Particularly pernicious is their claim if they do run a credit check it’s only a “soft pull”… what they are doing should be a hard pull and create a new trade line for an installment loan, albeit a bizarre 4 payment 4 week term one. Creditors are legally obligated to report accurate information. Klarna is conspiring not to do so.)
    - 2y ago
Theodores 2y ago
In the UK, if the government banned this, they would get accused of being a 'nanny state' and taking candy from babies. In reality, people on long term sick benefits would use this service to order strong alcohol to be delivered to their door at 11 in the morning on a Monday, with them being three weeks away from their next benefits payout. Food typically ordered with these services has no nutritional value with money from the local community going to venture capitalists and multinational companies, to keep poor people poor. There is so much degeneracy to purge and no will in government to do it.
- basisword 2y ago
  >> Food typically ordered with these services has no nutritional value This is complete nonsense. These services have a huge variety of restaurants and grocery stores. They're really useful for people with limited mobility who need groceries but don't have time to wait for a delivery from a large supermarket. Regardless, if someone wants to order cigarettes and alcohol on them they should be free to without having to account for your personal ethics.
  - Theodores 2y ago
    "Typically". In theory you could order extremely healthy food from these services. In theory these services could be a boon to disabled people that need to order extremely healthy food. If you are a shareholder you might believe this. But, if you work with vulnerable people that have substance abuse issues and no income other than benefits, you know how it really works and who the customers really are.
    - MyOutfitIsVague 2y ago
      Do you have statistics on hand? We know people order healthy food, and people order nutritionally void crap and alcohol. Without data, it's all meaningless conjecture.
    - basisword 2y ago
      So you're saying your view is biased based on your work.
philipwhiuk 2y ago
Essentially it's like paying with a credit card, right?
- basisword 2y ago
  An interest free one so typically even better than a credit card (provided you make the payments).
  - the_mitsuhiko 2y ago
    A credit card gives you ~30 days interest free credit before they charge you, Klarna not even two weeks.
  - horsawlarway 2y ago
    It's never really better than a credit card. 4 payments over 8 weeks, so you owe money sooner than you would with a credit card (2 weeks), and credit cards are also interest free assuming you pay in full. The longer deferred payment option includes interest fees. Failing to pay immediately puts you up near credit card interest APY (19% to 33%) and includes additional fees (usually $7 fee immediately). Then the merchant fees are higher as well (3.5% to 6% fees for klarna, 1.5% to 3.5% for visa) and the fixed fee is high (30 cents for Klarna vs 5 to 10 cents for visa), so you'll see additional surcharges on the product. --- If this was designed for orders over a specific amount and targeted things like large catering orders... fine I guess. As is... micro-finance is a nasty form of usury.
- atestu 2y ago
  Very similar at the end of the day, but this is in 4 interest-free installments.
  - mtlynch 2y ago
    It's four payments over six weeks. You generally don't pay interest on a purchase with a credit card if you pay it off within six weeks of the purchase. After the purchase, there's up to four weeks for the statement to close, and then another few weeks for you to pay your balance before you have to pay interest. But it looks like Klarna accepts credit cards, so I guess this lets you stretch out your cash even longer by combining the two.
basisword 2y ago
It's a tough one. To what extent do we need to go to protect people from their own stupidity? I remember doing something similar about 15 years ago. A pizza place accepted PayPal including a 'pay after delivery' option. This actually resulted in the payment being taken about 7 days after the order was placed and it was a handy way to get some food when I was broke right before pay day (they didn't check your balance before placing the order). ] Is it a bad idea to order takeout on credit - yeah usually it is. But if people want to do it why should we stop them? There are certainly legitimate use cases (e.g. placing a very large order for a group/party and having time to collect from everyone instead of having to front the cash yourself).
- awongh 2y ago
  Isn't there at least a little bit of social responsibility where the chances that the real utility is very small? If the feature was really about parties/large orders, how about enabling it for orders over $100? I don't think this is a real scenario. Otherwise it's just predatory and an anti-consumer dark pattern. See the current arguments about sports betting, there's some clear evidence that they aren't an entertainment product and there are clear predatory and anti-social product patterns at work. I don't believe in protecting people from their own stupidity but I also think we should call out blatant net-negative things lke this.
- maxerickson 2y ago
  If we are going to extend liability protections to investors, it goes hand in hand that we also tell them they can't run liability free scams, and punish them when they try.
- hermannj314 2y ago
  As a principle, we don't protect people from their stupidity unless we can profit more from being a nanny. Anyone can walk into a liquor store and buy enough alcohol to kill themselves or waste all their money at the casino. Who cares about people borrowing money for lunch? This country absolutely does not care at all for the poor (unless we've built an institution of exploitation disguised as benevolence)
- 2y ago
iambateman 2y ago
I mean…goofy, sure. But is this any different than every person who has credit card debt ordering a pizza?
- aaronbaugher 2y ago
  Not really, assuming a legit lender that isn't screwing you in the fine print somewhere. But buying pizza (or almost anything, really) on credit is a bad idea regardless of the lender, unless you have credit that's zero interest if paid off every month, and you're disciplined enough to do that. Most people posting on HN probably fall into that category. I wonder what percentage of people using DoorDash every day for lunch are that way.
  - iambateman 2y ago
    I'm not commenting on the wisdom of buying pizza on credit...I'm just saying that I struggle to see a difference between someone quietly buying pizza at 24.99% interest on their Mastercard and someone using Klarna to do the same thing at the point of purchase.
elicksaur 2y ago
I’ve wondered what the business model is here since klarna always advertises “interest free” loans. That option does exist, but from the actual announcement there’s another loan option - which of course is just a payday loan: > Pay in Full allows customers to pay for what they love right away using Klarna’s seamless payments experience. > Pay in 4 allows customers to pay in four equal interest-free installments > Pay Later allows customers to defer payments to a more convenient time, such as a date that aligns with their paycheck schedules https://about.doordash.com/en-us/news/doordash-partners-with-klarna https://about.doordash.com/en-us/news/doordash-partners-with... Edit: I’m understanding now they’re also betting on missed payments just like credit cards. The payday option maybe also be “interest free” - unclear from the press release imo.
- gruez 2y ago
  AFAIK klarna gets a cut of the payment (similar to interchange fees for credit card payments), so merchants in effect end up subsidizing the interest-free option. It's not any different than credit cards, which you don't pay any interest on if you pay on time.
  - elicksaur 2y ago
    Thanks for the context. Yeah, I’m reading up on them more now. It looks like they also make money on missed payments just like credit cards.
- thworp 2y ago
  The business model is essentially the same as credit cards, but with "fees" instead of interest payments. That is to say, Klarna takes a commission from merchants and the rest of their income is from people who didn't pay on time.
- rchaud 2y ago
  The business model is: sell your customers' purchase information to a bigger tradFi player.
- api 2y ago
jsat 2y ago
This is one of those things where it makes people feel very smart to dunk on it, but if you think critically for a minute, the behaviors this enables are already available in objectively more harmful ways: credit cards and payday loans. This makes things better, not worse. Obviously people wouldn't be doing this ideally, but that's the world we live in, and this isn't some new phenomenon or some sign of the times.
- elicksaur 2y ago
  Have you read the fine print on their website? It’s literally just a credit card/payday loan. The rates if you miss a payment go as high as 33% APR https://www.klarna.com https://www.klarna.com Edit: since it might vary by location, here’s what footnote 6 says for me, in part: > A $1,000 purchase might cost $181.04 per month over 6 months at 28.99% APR.* *Rate ranges from 7.99%-33.99% APR based on creditworthiness and subject to credit approval…
- rchaud 2y ago
  It appears that a simple bit of corporate 'synergy' camouflage has tricked you into thinking this is not a payday loan. Maybe those dunking on it are on to something.
- parpfish 2y ago
  or maybe it'll help highlight how dependent we've become on credit cards meditating almost every financial transaction. i distinctly remember ~20 years ago a that a friend bought a cup of coffee using a credit card and we all made fun of him for it because we thought he was trying to show off. "credit cards are for emergencies and big things like plane tickets, not a three dollar coffee". now, i go weeks without having any cash on me.
bandrami 2y ago
I stg if tranched subprime burrito delivery debt is our downfall we will 100% deserve it
- rchaud 2y ago
  2026: IMF rings the alarm on plummeting yields on collateralized burrito obligations.
xyst 2y ago
Nano-loaning is getting out of hand. If you default on the 4 free interest payments, Klarna or underwriter will impose a 28.99% APR… > The Klarna Card is issued by WebBank pursuant to a license from Visa U.S.A. Convert any purchase to Pay in 4 issued by Klarna Inc. CA Resident Loans made or arranged pursuant to a California Financing Law license. NMLS #1353190. *28.99% APR applies to all moved or split transactions. I really hope the cap of interest rates at the federal level gets some momentum. These types of companies need to die off.
- xp84 2y ago
  Cap on interest? I wouldn’t keep holding your breath wait in for that. For people borrowing at 30% interest, which includes many credit card holders today (including basically every card issued by a retailer today), if this type of financing wasn’t available, the next best options are just going without. Problem is, some of those people are racking up high interest debt to do things like feed their kids. There’s a lot of collateral damage to just taking credit away from everyone with a score under 750, which is what doing away with high interest options will amount to.
  - worik 2y ago
    > Problem is, some of those people are racking up high interest debt to do things like feed their kids. Yes that is a problem. Lending them money at ruinous interest rates is a cruel solution. Perhaps we could do something about poverty that exists amid such huge wealth.
    - xp84 2y ago
      There will always be poverty and there will always be huge wealth. Even in Soviet Russia and Mao's China, that was true. And nobody can say they didn't try to fix that 'problem.' Virtually the whole would would all agree that we'd prefer to not have it, and so many have made attempts, but no one has eliminated poverty, and those who have made a run at wealth equality the most fervently, like Mao, also killed billions in the process of failing to accomplish it. My only point is that it's clearly a much harder problem than you pretend it is.
rchaud 2y ago
Any guesses where the economic dystopia wheel of fortune will land next? - Doordash to pay drivers with free bets on FanDuel? - UberEats to develop a credit monitoring business? - SkipTheDishes to offer home liver function tests with every booze order?
- addandsubtract 2y ago
  Drink verification can to continue.
fireburning 2y ago
lol sometimes it is so hard to predict what will show up on HN but the takes of "i used to poor turned it around by my hard work nothing else" crowd is always a hoot
NoMoreNicksLeft 2y ago
For me, I think the "oh shit, this can't be good" moment came about 10 years ago when I learned that people couldn't afford tires (not wheels/rims, we all know how absurd those are) for their SUVs that cost as much as my house. Back then, I read some long-form article about how they were financing new tires. Admittedly, doing the same for delivery food is more extreme still, but one wonders what legitimate problem this could ever solve. I suppose there is someone out there who can afford the meal but they're tapped out until payday, and yet I wonder why they don't have an (unused until this point) credit card to tide them over until Friday. Neither savings nor card, something's gone horrendously wrong.
- aaronbaugher 2y ago
  As someone who's been broke and making bad credit decisions to float things along, I'd say it's often a mindset, getting in a mental rut where you just keep doing the same thing because it solves the problem for today. I'm not talking here about people who are truly poor and have insufficient income, but people who have money coming in and going out but always seem to be a couple months behind. So lots of stuff goes on credit and costs interest, and they pay a lot of late fees and sometimes overdrafts. But they never fall further behind, so they feel like if they could just get over the hump, they'd be okay. And if you look at their numbers, they're right. But if you handed them a couple months' income so they could get caught up, they'd probably be right back in the same situation within a year, because "barely keeping up" feels normal to them, so the difference between that and "in the black" feels like a buffer they can safely spend down. What it probably takes (what it took for me, anyway) was not just a new job with a regular salary, but a change in mindset, especially starting to keep a budget so I know where every paycheck is going before I get it. I haven't paid a late fee or a dollar in interest (except my mortgage) for five years, and that's saved me thousands of dollars over what I was spending before. Life is expensive when you're broke.
kpwagner 2y ago
Something has always bugged me about DoorDash. It just seems so wasteful. What does it take to get a chicken sandwich, fries, and a drink to my door? I've never pinpointed the waste, but intuitively, it just feels like there is waste at every point along the chain. So, I've only used the service once--with a gift card. I have to admit, as a business, DASH has exceeded my expectations. 50% gross margins, high growth, and they recently posted a net profit--barring accounting fuckery. The ratio of sales & marketing to revenue is almost reasonable; I once grouped DASH with sportsbooks as "detrimental sales spend to keep a narrative going... will not end well." In the long run, if the mission is "get food to you conveniently", technology can do amazing things with time. All of this is a little off topic. Regarding the Klarna partnership, yeah it's a dangerous service that will get misused while having a few beneficial uses. But that's basically all of consumer finance. All consumer debt is some shade of gray, good to bad.
itqwertz 2y ago
Payment plans on luxury products are a time-honored tradition in the U.S. I’m not sure how you justify a room temperature hamburger costing that much.
dagw 2y ago
In Sweden (the home of Klarna) you've been able to pay for your DoorDash equivalent using Klarna for ages now, and I've never heard of any backlash or even anybody questioning it. If you can pay by credit card, why not Klarna? I'm surprised that in the US, the credit card Mecca of the world, this even moves the needle. edit: In fact if I was more conspiratorial, I might suggest that this 'backlash' was orchestrated behind the scenes by Master Card and Visa to protect their market share.
- bl4ckneon 2y ago
  When I first heard of this I thought it was kinda crazy, who would do a payment plan to get some overpriced takeout delivered food. But like you pointed out, it's more or less the same as a credit card, which I didn't even think of. I guess credit cards are so normalized and has the option to pay it all off at once. Good point!

44 points by ferguess_k 2y ago

Between that and many "banks" offering you to "invest" in crypto straight from their mobile apps home page... it seems like they're trying to milk whatever is left in the pockets of the bottom tier Debt is a powerful tool when used by educated people for legit reasons, buying a new TV or chicken wings isn't one of them.

brianmcc 2y ago
Agree re chicken wings but there are plenty of reasonable and responsible credit options for spreading payments for a relatively unusual purchase - at least, not a daily or weekly necessity - like a TV
- account42 2y ago
  Not really - for something like a TV you can wait or get a more modest model. And if waiting would take too long then it's probably not a reasonable expense for you.
  - fireburning 2y ago
    i get the vibe from this comment you probably believe all poor people are poor because of their spemding habits :)
    - ohnoitsahuman 2y ago
      Depends. If your poor in America, then spending is often part of the equation. If your poor in India then perhaps not.
    - elicksaur 2y ago
      There are obviously external forces that contribute to anyone’s circumstances rich or poor. But, ultimately, you can only spend as much as you make in income, or go bankrupt. Choosing to tack on an interest payment to your costs is often an unnecessary additional cost for people. That’s true if you’re poor buying a rudimentary TV or rich maxing out credit cards to furnish your mansion.
  - brianmcc 2y ago
    Sorry no but domestic white goods such as TVs, fridges, laundry appliances, etc are the perfect use case for small credit plans where doing without or "saving up" is a poor alternative, and sensible non-extortionate credit options have been around for literally decades for this reason.
- palmotea 2y ago
  > Agree re chicken wings but there are plenty of reasonable and responsible credit options for spreading payments for a relatively unusual purchase - at least, not a daily or weekly necessity - like a TV That stopped being true a long time ago, at least in the US. TVs can be had incredibly cheaply nowadays. A quick Amazon search shows many models available for circa $100. That's like less than a dozen fast food meals. If you need a TV, save your money and buy one you can afford. A predatory payment plan should not be used.
  - brianmcc 2y ago
    OK but US really is in a world of its own these for a lot of things. In the UK it's very common to get 0% interest installments. Which is not to have a go at the US, but to just make the point that buying domestic appliances is not a simple "bad credit" case. Unlike chicken wings.
fireburning 2y ago
man that's the engine of modern day slavery or commonly referred to by the players of the game as the trap :)
asow92 2y ago
Since we're already dealing in absurds here, what if one were to Doordash 50 servings of wings as a emergency/backup catering option for a banquet or wedding? That could easily top $500-800. I sure some consumers—including financially secure ones—would appreciate an interest free loan option on that. Obviously there is also the opposite dark and pessimistic take here, but there are potentially good things as well?
- ceejayoz 2y ago
  A financially-secure person can put it on their credit card, and pay no interest because they always pay their full statement balance. Someone who can't probably shouldn't be spending $800 on wings.
  - gruez 2y ago
    >A financially-secure person can put it on their credit card, and pay no interest because they always pay their full statement balance. klarna offers a 4 equal interest free payments option. How that any different from a credit card?
  - fireburning 2y ago
    im all for let us poor brokies do what we want
  - asow92 2y ago
    As a financially secure person, why would I want to spend $800 today when I can spend $800 over four months with no penalty? It doesn't make any sense in the slightest, that is unless you're not savvy enough to keep track of your money?
    - ceejayoz 2y ago
      Klarna is four payments over eight weeks. That's about the same float as a credit card, which can be up to 60.
      - 2y ago
dialup_sounds 2y ago
I got a similar vibe from RobinHood adding sports prediction markets.
- xp84 2y ago
  I highly approve of the acknowledgment of both of those types of gambling being treated as one thing.
  - drivingmenuts 2y ago
    I trust both entities equally. Which is to say: not at fucking all.
NoMoreNicksLeft 2y ago
>Debt is a powerful tool when used by educated people for legit reasons, Debt is a dangerous tool when used carefully and intelligently. When used carelessly or unintelligently it is a ruinous monster. We live in a world that allegedly is more educated than ever, but I don't think education is sufficient to avoid this pitfall.

coldcode 2y ago

"I'll gladly pay you the next four Tuesdays for a hamburger today" does seem like a bad economic concept.

comrade1234 2y ago

It’s not a bad strategy as a consumer if you order a lot of fast food through DoorDash. It’s an interest-free loan and you might just die before you have to pay it off.

rchaud 2y ago
Wouldn't count on that sticking around, I remember when these apps used to market "no tipping" as a feature. Now there's a giant tip screen front and center in the UI for completed orders.
- zhoujianfu 2y ago
  In their defense, DoorDash always had a giant tipping screen… it’s just that they used to steal it from their drivers.

yurishimo 2y ago

This is a fundamental misalignment between a business and their customers. The business doesn’t care if the customer can actually afford the product and they’re happy to push off that responsibility to credit card companies or Klarna in this case, but it’s so shortsighted because anyone with two braincells knows that if your customer cannot afford a <$50 purchase without debt, that they can’t afford that thing at all. In the long run, customers who should have been blocked from purchasing due to lack of funds will instead write bad reviews about their experience being sent to a collector over a cheeseburger and they’ll bounce off your platform. “Short term profits ruin everything” for 200 Alex!

gruez 2y ago
>This is a fundamental misalignment between a business and their customers. The business doesn’t care if the customer can actually afford the product and they’re happy to push off that responsibility to credit card companies or Klarna in this case, but it’s so shortsighted because anyone with two braincells knows that if your customer cannot afford a <$50 purchase without debt, that they can’t afford that thing at all. Accepting credit cards theoretically allows businesses to sell to customers that don't have the money. Is this bad, and should we chastise businesses for not limiting themselves to debit payments only?
- trollbridge 2y ago
  Credit cards have some brakes because they only extend credit to people they think will pay it back. Klarna’s marketing pitch is “no credit check”. They then just send an automated ACH to your bank account. If the funds aren’t there they send it over and over, hoping to punish you with returned-payment fees or overdraft fees. It’s quite different than a credit card and significantly more predatory. (Particularly pernicious is their claim if they do run a credit check it’s only a “soft pull”… what they are doing should be a hard pull and create a new trade line for an installment loan, albeit a bizarre 4 payment 4 week term one. Creditors are legally obligated to report accurate information. Klarna is conspiring not to do so.)
  - 2y ago

Theodores 2y ago

In the UK, if the government banned this, they would get accused of being a 'nanny state' and taking candy from babies. In reality, people on long term sick benefits would use this service to order strong alcohol to be delivered to their door at 11 in the morning on a Monday, with them being three weeks away from their next benefits payout. Food typically ordered with these services has no nutritional value with money from the local community going to venture capitalists and multinational companies, to keep poor people poor. There is so much degeneracy to purge and no will in government to do it.

basisword 2y ago
>> Food typically ordered with these services has no nutritional value This is complete nonsense. These services have a huge variety of restaurants and grocery stores. They're really useful for people with limited mobility who need groceries but don't have time to wait for a delivery from a large supermarket. Regardless, if someone wants to order cigarettes and alcohol on them they should be free to without having to account for your personal ethics.
- Theodores 2y ago
  "Typically". In theory you could order extremely healthy food from these services. In theory these services could be a boon to disabled people that need to order extremely healthy food. If you are a shareholder you might believe this. But, if you work with vulnerable people that have substance abuse issues and no income other than benefits, you know how it really works and who the customers really are.
  - MyOutfitIsVague 2y ago
    Do you have statistics on hand? We know people order healthy food, and people order nutritionally void crap and alcohol. Without data, it's all meaningless conjecture.
  - basisword 2y ago
    So you're saying your view is biased based on your work.

philipwhiuk 2y ago

Essentially it's like paying with a credit card, right?

basisword 2y ago
An interest free one so typically even better than a credit card (provided you make the payments).
- the_mitsuhiko 2y ago
  A credit card gives you ~30 days interest free credit before they charge you, Klarna not even two weeks.
- horsawlarway 2y ago
  It's never really better than a credit card. 4 payments over 8 weeks, so you owe money sooner than you would with a credit card (2 weeks), and credit cards are also interest free assuming you pay in full. The longer deferred payment option includes interest fees. Failing to pay immediately puts you up near credit card interest APY (19% to 33%) and includes additional fees (usually $7 fee immediately). Then the merchant fees are higher as well (3.5% to 6% fees for klarna, 1.5% to 3.5% for visa) and the fixed fee is high (30 cents for Klarna vs 5 to 10 cents for visa), so you'll see additional surcharges on the product. --- If this was designed for orders over a specific amount and targeted things like large catering orders... fine I guess. As is... micro-finance is a nasty form of usury.
atestu 2y ago
Very similar at the end of the day, but this is in 4 interest-free installments.
- mtlynch 2y ago
  It's four payments over six weeks. You generally don't pay interest on a purchase with a credit card if you pay it off within six weeks of the purchase. After the purchase, there's up to four weeks for the statement to close, and then another few weeks for you to pay your balance before you have to pay interest. But it looks like Klarna accepts credit cards, so I guess this lets you stretch out your cash even longer by combining the two.

basisword 2y ago

It's a tough one. To what extent do we need to go to protect people from their own stupidity? I remember doing something similar about 15 years ago. A pizza place accepted PayPal including a 'pay after delivery' option. This actually resulted in the payment being taken about 7 days after the order was placed and it was a handy way to get some food when I was broke right before pay day (they didn't check your balance before placing the order). ] Is it a bad idea to order takeout on credit - yeah usually it is. But if people want to do it why should we stop them? There are certainly legitimate use cases (e.g. placing a very large order for a group/party and having time to collect from everyone instead of having to front the cash yourself).

awongh 2y ago
Isn't there at least a little bit of social responsibility where the chances that the real utility is very small? If the feature was really about parties/large orders, how about enabling it for orders over $100? I don't think this is a real scenario. Otherwise it's just predatory and an anti-consumer dark pattern. See the current arguments about sports betting, there's some clear evidence that they aren't an entertainment product and there are clear predatory and anti-social product patterns at work. I don't believe in protecting people from their own stupidity but I also think we should call out blatant net-negative things lke this.
maxerickson 2y ago
If we are going to extend liability protections to investors, it goes hand in hand that we also tell them they can't run liability free scams, and punish them when they try.
hermannj314 2y ago
As a principle, we don't protect people from their stupidity unless we can profit more from being a nanny. Anyone can walk into a liquor store and buy enough alcohol to kill themselves or waste all their money at the casino. Who cares about people borrowing money for lunch? This country absolutely does not care at all for the poor (unless we've built an institution of exploitation disguised as benevolence)
2y ago

iambateman 2y ago

I mean…goofy, sure. But is this any different than every person who has credit card debt ordering a pizza?

aaronbaugher 2y ago
Not really, assuming a legit lender that isn't screwing you in the fine print somewhere. But buying pizza (or almost anything, really) on credit is a bad idea regardless of the lender, unless you have credit that's zero interest if paid off every month, and you're disciplined enough to do that. Most people posting on HN probably fall into that category. I wonder what percentage of people using DoorDash every day for lunch are that way.
- iambateman 2y ago
  I'm not commenting on the wisdom of buying pizza on credit...I'm just saying that I struggle to see a difference between someone quietly buying pizza at 24.99% interest on their Mastercard and someone using Klarna to do the same thing at the point of purchase.

elicksaur 2y ago

I’ve wondered what the business model is here since klarna always advertises “interest free” loans. That option does exist, but from the actual announcement there’s another loan option - which of course is just a payday loan: > Pay in Full allows customers to pay for what they love right away using Klarna’s seamless payments experience. > Pay in 4 allows customers to pay in four equal interest-free installments > Pay Later allows customers to defer payments to a more convenient time, such as a date that aligns with their paycheck schedules https://about.doordash.com/en-us/news/doordash-partners-with-klarna https://about.doordash.com/en-us/news/doordash-partners-with... Edit: I’m understanding now they’re also betting on missed payments just like credit cards. The payday option maybe also be “interest free” - unclear from the press release imo.

gruez 2y ago
AFAIK klarna gets a cut of the payment (similar to interchange fees for credit card payments), so merchants in effect end up subsidizing the interest-free option. It's not any different than credit cards, which you don't pay any interest on if you pay on time.
- elicksaur 2y ago
  Thanks for the context. Yeah, I’m reading up on them more now. It looks like they also make money on missed payments just like credit cards.
thworp 2y ago
The business model is essentially the same as credit cards, but with "fees" instead of interest payments. That is to say, Klarna takes a commission from merchants and the rest of their income is from people who didn't pay on time.
rchaud 2y ago
The business model is: sell your customers' purchase information to a bigger tradFi player.
api 2y ago

jsat 2y ago

This is one of those things where it makes people feel very smart to dunk on it, but if you think critically for a minute, the behaviors this enables are already available in objectively more harmful ways: credit cards and payday loans. This makes things better, not worse. Obviously people wouldn't be doing this ideally, but that's the world we live in, and this isn't some new phenomenon or some sign of the times.

elicksaur 2y ago
Have you read the fine print on their website? It’s literally just a credit card/payday loan. The rates if you miss a payment go as high as 33% APR https://www.klarna.com https://www.klarna.com Edit: since it might vary by location, here’s what footnote 6 says for me, in part: > A $1,000 purchase might cost $181.04 per month over 6 months at 28.99% APR.* *Rate ranges from 7.99%-33.99% APR based on creditworthiness and subject to credit approval…
rchaud 2y ago
It appears that a simple bit of corporate 'synergy' camouflage has tricked you into thinking this is not a payday loan. Maybe those dunking on it are on to something.
parpfish 2y ago
or maybe it'll help highlight how dependent we've become on credit cards meditating almost every financial transaction. i distinctly remember ~20 years ago a that a friend bought a cup of coffee using a credit card and we all made fun of him for it because we thought he was trying to show off. "credit cards are for emergencies and big things like plane tickets, not a three dollar coffee". now, i go weeks without having any cash on me.

bandrami 2y ago

I stg if tranched subprime burrito delivery debt is our downfall we will 100% deserve it

rchaud 2y ago
2026: IMF rings the alarm on plummeting yields on collateralized burrito obligations.

xyst 2y ago

Nano-loaning is getting out of hand. If you default on the 4 free interest payments, Klarna or underwriter will impose a 28.99% APR… > The Klarna Card is issued by WebBank pursuant to a license from Visa U.S.A. Convert any purchase to Pay in 4 issued by Klarna Inc. CA Resident Loans made or arranged pursuant to a California Financing Law license. NMLS #1353190. *28.99% APR applies to all moved or split transactions. I really hope the cap of interest rates at the federal level gets some momentum. These types of companies need to die off.

xp84 2y ago
Cap on interest? I wouldn’t keep holding your breath wait in for that. For people borrowing at 30% interest, which includes many credit card holders today (including basically every card issued by a retailer today), if this type of financing wasn’t available, the next best options are just going without. Problem is, some of those people are racking up high interest debt to do things like feed their kids. There’s a lot of collateral damage to just taking credit away from everyone with a score under 750, which is what doing away with high interest options will amount to.
- worik 2y ago
  > Problem is, some of those people are racking up high interest debt to do things like feed their kids. Yes that is a problem. Lending them money at ruinous interest rates is a cruel solution. Perhaps we could do something about poverty that exists amid such huge wealth.
  - xp84 2y ago
    There will always be poverty and there will always be huge wealth. Even in Soviet Russia and Mao's China, that was true. And nobody can say they didn't try to fix that 'problem.' Virtually the whole would would all agree that we'd prefer to not have it, and so many have made attempts, but no one has eliminated poverty, and those who have made a run at wealth equality the most fervently, like Mao, also killed billions in the process of failing to accomplish it. My only point is that it's clearly a much harder problem than you pretend it is.

rchaud 2y ago

Any guesses where the economic dystopia wheel of fortune will land next? - Doordash to pay drivers with free bets on FanDuel? - UberEats to develop a credit monitoring business? - SkipTheDishes to offer home liver function tests with every booze order?

addandsubtract 2y ago
Drink verification can to continue.

fireburning 2y ago

lol sometimes it is so hard to predict what will show up on HN but the takes of "i used to poor turned it around by my hard work nothing else" crowd is always a hoot

NoMoreNicksLeft 2y ago

For me, I think the "oh shit, this can't be good" moment came about 10 years ago when I learned that people couldn't afford tires (not wheels/rims, we all know how absurd those are) for their SUVs that cost as much as my house. Back then, I read some long-form article about how they were financing new tires. Admittedly, doing the same for delivery food is more extreme still, but one wonders what legitimate problem this could ever solve. I suppose there is someone out there who can afford the meal but they're tapped out until payday, and yet I wonder why they don't have an (unused until this point) credit card to tide them over until Friday. Neither savings nor card, something's gone horrendously wrong.

aaronbaugher 2y ago
As someone who's been broke and making bad credit decisions to float things along, I'd say it's often a mindset, getting in a mental rut where you just keep doing the same thing because it solves the problem for today. I'm not talking here about people who are truly poor and have insufficient income, but people who have money coming in and going out but always seem to be a couple months behind. So lots of stuff goes on credit and costs interest, and they pay a lot of late fees and sometimes overdrafts. But they never fall further behind, so they feel like if they could just get over the hump, they'd be okay. And if you look at their numbers, they're right. But if you handed them a couple months' income so they could get caught up, they'd probably be right back in the same situation within a year, because "barely keeping up" feels normal to them, so the difference between that and "in the black" feels like a buffer they can safely spend down. What it probably takes (what it took for me, anyway) was not just a new job with a regular salary, but a change in mindset, especially starting to keep a budget so I know where every paycheck is going before I get it. I haven't paid a late fee or a dollar in interest (except my mortgage) for five years, and that's saved me thousands of dollars over what I was spending before. Life is expensive when you're broke.

kpwagner 2y ago

Something has always bugged me about DoorDash. It just seems so wasteful. What does it take to get a chicken sandwich, fries, and a drink to my door? I've never pinpointed the waste, but intuitively, it just feels like there is waste at every point along the chain. So, I've only used the service once--with a gift card. I have to admit, as a business, DASH has exceeded my expectations. 50% gross margins, high growth, and they recently posted a net profit--barring accounting fuckery. The ratio of sales & marketing to revenue is almost reasonable; I once grouped DASH with sportsbooks as "detrimental sales spend to keep a narrative going... will not end well." In the long run, if the mission is "get food to you conveniently", technology can do amazing things with time. All of this is a little off topic. Regarding the Klarna partnership, yeah it's a dangerous service that will get misused while having a few beneficial uses. But that's basically all of consumer finance. All consumer debt is some shade of gray, good to bad.

itqwertz 2y ago

Payment plans on luxury products are a time-honored tradition in the U.S. I’m not sure how you justify a room temperature hamburger costing that much.

dagw 2y ago

In Sweden (the home of Klarna) you've been able to pay for your DoorDash equivalent using Klarna for ages now, and I've never heard of any backlash or even anybody questioning it. If you can pay by credit card, why not Klarna? I'm surprised that in the US, the credit card Mecca of the world, this even moves the needle. edit: In fact if I was more conspiratorial, I might suggest that this 'backlash' was orchestrated behind the scenes by Master Card and Visa to protect their market share.

bl4ckneon 2y ago
When I first heard of this I thought it was kinda crazy, who would do a payment plan to get some overpriced takeout delivered food. But like you pointed out, it's more or less the same as a credit card, which I didn't even think of. I guess credit cards are so normalized and has the option to pay it all off at once. Good point!