Deliveroo X Klarna partnership
Deliveroo, the online food delivery company, has partnered with Sweden-based buy now, pay later (BNPL) provider Klarna, to offer customers the possibility to buy groceries and takeout food on credit. The app users can see the payment option at checkout, where they can opt to pay the full amount immediately, within 30 days or in instalments over 60 days for orders over £30.
What is Klarna?
Klarna charges no interest or fees if the full amount is paid in full within the set time. “You will only ever owe the cost of your original purchase,” the company told The Grocer. Klarna partners with over 25,000 retailers in the UK including H&M, Ikea, Samsung and Asos and states they make their money through retailer fees. The provider claims its users have “extremely low default rates, well below 1%”.
How has inflation contributed to the partnership?
As inflation rises to 10.1% “Millions of people are already choosing Klarna and we’re giving customers more choice and more flexibility with a safe, secure way to pay online,” said Carlo Mocci, chief business officer UK&I at Deliveroo. “We believe you should only pay for what you buy with no interest or fees, and it’s never been more important for consumers to have access to payment options which help them stay in control of their finances,” he added.
Criticism from experts
However, the partnership has drawn criticism. Personal finance expert Tara Flynn from Choosewisely.co.uk said: “If you’re considering buying your takeaway now and paying for it later… don’t. Getting yourself into debt over a meal that’s gone in 15 minutes isn’t worth it. I think it’s irresponsible for Deliveroo to offer this as an option, and they need to seriously reconsider this move”.
Andy Duggan of marketing consultancy Hitsuzendo said: “It’s a step too far because there’s never any financial education to go alongside this. All brands working with Deliveroo now need to ask themselves: are they part of a problem that’s going to explode in the future?”
Alex Marsh, Klarna’s UK chief responded to the backlash by saying “If you’re on a tight budget and decide to put on a treat for the family, why should your only option be a high-interest credit card?” A spokesman for Klarna also stated that research by the company had found that 1 in 5 Brits pay for takeaways on a credit card, and 1 in 7 have used an overdraft. “People have been paying for takeaways with credit cards and overdrafts for decades,” they said.
What next?
Could buy now pay later be the future of our shopping? As the cost of living crisis worsens, more people are relying on this method of payment for fashion and now takeaways. Could we see this method being used when it comes to grocery shopping?
Do you think this partnership is a good business idea or will it cause people to spiral into dept?
