Martin Lewis criticises Deliveroo for allowing customers to buy now, pay later for takeaways
Consumer champion Martin Lewis has criticised food delivery company Deliveroo for partnering with a buy now, pay later app saying customers should not be racking up debt for a "cheeky Nandos".
Deliveroo customers are now being given the option to spread payments for orders over three installments with Klarna when they order food or groceries.
But Mr Lewis said that while buy now, pay later apps seemed "innocuous" they are "debt, even if done right it's 0%".
At checkout, Deliveroo customers will now have the option to pay immediately, pay the full amount within 30 days, or to pay in three equal instalments, spread over 60 days, for orders over £30. The delayed payment options incur no interest or fees.
Commenting on the move, Mr Lewis tweeted: "Dear @Deliveroo do you really need pump debt as a way to pay for takeaways?"Buy Now Pay Later may seem innocuous but it is 1) Not yet regulated 2) Debt, even if done right its 0%"Borrowing should only be if NEEDED, for planned one off budgeted purchase, not a cheeky nandos."
But Klarna said its BNPL offered a "healthier alternative" to credit cards.
Responding to Mr Lewis' critisism, Klarna CEO Sebastian Siemiatkowski tweeted: "Interesting @MartinSLewis! @Deliveroo should accept credit cards with up to 54% interest…"But not Klarna that offers debit and interest free credit?"Curious, does your money saving website make affiliate money from selling credit cards?"
A Klarna spokesperson said: “People have been paying for food deliveries with credit cards and overdrafts for decades but they've been stung by rip-off fees and extortionate interest so it’s time consumers had the choice of a healthier alternative where they only ever pay the original cost of the purchase."
Announcing the partnership, David Sykes, Chief Commercial Officer, Klarna said: “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.”Carlo Mocci, Chief Business Officer UK&I, Deliveroo, said: “Deliveroo offers amazing choice to our customers, from neighbourhood eateries and your weekday lunch to a Saturday night celebration.
"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.”
Last month Deliveroo revealed it was operating at a loss of £147 million in the first half of the year, after cash-strapped consumers cut back on takeaways.
Its half-year losses had widened significantly from the £95 million posted a year ago.
More than a third of consumers say buy now, pay later (BNPL) has become more appealing in the cost-of-living crisis as one in three users report such schemes have left them with unmanageable debt, according to research by Barclays and debt charity StepChange earlier this year.
BNPL users are now paying off 4.8 purchases on average – up from 2.6 in February – with the average amount owed standing at more than £250.
The rising cost of living is having a direct impact on the popularity of BNPL purchases, with 36% of consumers saying the lending – much of which is still unregulated – has become more appealing since inflation began to climb.