According to the interview with the New York Times, JP Morgan Chase shared that Buy-Now, Pay-Later loans “are a form of credit” and that the bank “did not generally allow customers to pay for credit products.”
The US bank informed credit cardholders on their latest statements:
“Effective October 10, 2024, you cannot use Chase credit cards to pay for third-party Buy Now, Pay Later (BNPL) installment plans. Payments to these installment 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 missed payments or late fees (if applicable).”
Why the Change and How this ” Change” Will Profit Chase
It is believed that Chase will significantly benefit from the change, as it will shield them from accumulating both credit card and BNPL debt.
Blocking credit card payments to third-party BNPL services will quietly nudge the company’s customers to use its BNPL option—Chase Pay Over Time. The new Chase BNPL was recently announced, which is believed to be one of the reasons for blocking third-party action.
“Chase’s decision to stop allowing its credit cards for third-party BNPL platforms like Klarna and AfterPay is a smart, although calculated, move,” said Cassandra Happe, communications manager at WalletHub.
“Effective October 10, 2024, this change is designed to steer customers towards Chase’s BNPL service, Chase Pay Over Time. By doing this, Chase captures all transaction fees and interest and gains better control over customer data and spending behaviors. This data is invaluable for tailoring financial products and services, strengthening Chase’s competitive edge.”
According to the Newsweek report, experts expect other companies to follow Chase’s example. They added that Chase is unlikely to face any customer resistance because it offers its BNPL option and has given customers three months’ notice of the pending policy change.
In the report, Alex Beene, a financial literacy instructor at the University of Tennessee at Martin, said Chase is doing what other banks are slowly implementing.
“Chase is doing something that other banks are slowly and methodically implementing: pushing customers to their financial products,” he said
“Their elimination of third-party programs signals that customers who want a similar process will have to use Pay Over Time for those purchases moving forward.
“This may irritate some customers, as the Buy Now, Pay Later set-up of other vendors can be more convenient, especially when checking out through a retailer. However, in the grand scheme, Chase’s program allows them to carry out the same concept.”
