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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.

7 comments

Chase stops customers using credit cards to make BNPL instalment payments

Editorial

This content has been selected, created and edited by the Finextra editorial team based upon its relevance and interest to our community.

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.

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Comments: (7)

A Finextra member 

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 

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 MD at FIS

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 Founder and CEO at GTM360 Marketing Solutions

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 

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 Founder and CEO at GTM360 Marketing Solutions

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. 

David Abbott

David Abbott Senior Sales Manager, Cards - Europe at FIS

Its been called 'Kiting' forever and has been banned by most credit providers 'forever'....  I guess the BNPL guys slipped under Chase's radar for a while....  Sounds like they closed a loophole

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