Americans struggling with skyrocketing gasoline prices now have the option to postpone their payments at the pump. Klarna, a “buy now, pay later” service, has partnered with Texaco and Chevron gas stations to allow consumers to buy gas in installments.
The Klarna app alerted its users this week: “Beep beep! You can now gas up or grab snacks at Chevron and Texaco and split the cost over 6 weeks with Klarna.”
The average national price for a gallon of gas today is $4.29, according to the American Automobile Association (AAA). Crude prices have soared since Russia invaded Ukraine on February 24, prompting President Joe Biden to ban Russian energy imports to the United States.
According to March survey data from the AAA, 59 percent of Americans said $4 per gallon represented a tipping point that would force them to adjust their driving habits or lifestyle. A vast majority, 75 percent, said they would have to change their lifestyle when the price of gas rose to $5 per gallon, which it already has in the western United States.
Now drivers can simply create a digital in-store card for Chevron or Texaco in the Klarna mobile app, add it to their Apple or Google wallet and tap to make partial payments at a gas station.
It’s the same kind of extended payment plan that has encouraged millions of Americans to use Klarna and other “buy now, pay later” (BNPL) services to purchase merchandise, flights and hotels.
Buy Gas Now and Pay Later
The payment method is popular among consumers who have to stretch out the costs of necessities and those who can’t qualify for a credit card or other forms of financing. Newsweek has reported that between one-third and one-half of the population has used a BNPL plan at least once and approximately three-quarters of those users are repeat customers. Last year, Americans spent $20.8 billion dollars through short-term loan services.
The risks these plans carry, which can include late fees and interest charges, potential credit score damage, a lack of traditional oversight and of course the temptation to spend more than you can afford, are often obscure to consumers. In December 2021, the Consumer Financial Protection Bureau launched an inquiry into five leading BNPL companies, including Klarna.
“The CFPB is concerned about accumulating debt, regulatory arbitrage, and data harvesting in a consumer credit market already quickly changing with technology,” a press release from the watchdog said.
Klarna told Newsweek in a statement: “Our products are interest free which means consumers don’t have to worry about accumulating interest like they would on a credit card if they need extra time to pay off their balance.”