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Chase stops customers using credit cards to make BNPL instalment payments

Chase stops customers using credit cards to make BNPL instalment payments

Chase customers will soon be banned from using their credit cards to pay for third-part BNPL instalment plans.

The US bank informed credit cardholders on their latest statements:

"Effective October 10, 2024, you will not be able to use Chase credit cards to pay for third-party Buy Now Pay Later (“BNPL”) instalment plans. Payments to these instalment plans (e.g., Klarna, AfterPay, etc.) using your Chase credit card will be declined.

"If your Chase credit card is used for any of these recurring BNPL plans, please update the payment method with your BNPL provider to avoid any missed payments or late fees (if applicable)."

The bank offers its own BNPL feature, Chase Pay Over Time, which lets users break up credit card purchases into instalments.

Comments: (6)

A Finextra member
A Finextra member 18 July, 2024, 09:34Be the first to give this comment the thumbs up 0 likes

That is a surprising action; I am not familiar with any similar refusal to limit card usage, other than for illegal or immoral purposes. Would JPM like to publish what products or services they don't want their cards used for - or may plan to refuse to service - on the basis they have a competing service they wish to protect? 

A Finextra member
A Finextra member 18 July, 2024, 10:041 like 1 like

This looks like sensible risk management - paying BNPL with a credit card is equivalent to paying a credit card balance with another credit card, which no issuer would allow.

Edward Lodens
Edward Lodens - FIS - Sydney 19 July, 2024, 00:54Be the first to give this comment the thumbs up 0 likes

While yes, enabling unsecured credit to pay another unsecured creditor I'll you'll find with Chase's ~20% marketshare in the US they are losing interest income from revolvers.  

Ketharaman Swaminathan
Ketharaman Swaminathan - GTM360 Marketing Solutions - Pune 19 July, 2024, 11:46Be the first to give this comment the thumbs up 0 likes

Outside of USA, I don't know any markets where BNPL installments could ever be paid with a credit card. JPMC just seems to be adopting RoW prudential lending practices. Of course, the fact that it has a competing BNPL product, does create optics problems for its move.

A Finextra member
A Finextra member 19 July, 2024, 14:32Be the first to give this comment the thumbs up 0 likes

You can understand he banks position here. It has assessed the credit risk of an individual and BNPL add another layer of risk. There is however a simple solution for customers. Just use a different credit card?

Ketharaman Swaminathan
Ketharaman Swaminathan - GTM360 Marketing Solutions - Pune 19 July, 2024, 14:46Be the first to give this comment the thumbs up 0 likes

Unfo, the solution may not be that simple. Last I checked, roughly half of BNPL users in USA do not quality for a credit card. I'm guessing very few people out of the other half has more than one credit card. 

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