CHASE Bank has announced that it will discontinue a payment option for a popular service, forcing customers to use alternative methods.
The bank will no longer allow customers to use their credit cards to pay for third-party Buy Now, Pay Later plans.
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JPMorgan Chase, the largest credit card issuer in the US, announced that it will stop allowing its customers to use their credit cards to pay for its popular Buy Now, Pay Later loans.
Previously, customers could pay later using Chase credit cards through services like Klarna, Affirm, Afterpay, Sezzle and PayPal.
Buy Now, Pay Later loans “are a form of credit” and the bank “generally did not allow customers to pay for credit products” with their Chase credit cards, the company shared with The New York Times.
Chase has been alerting customers about the change, which will take effect in a few months at the beginning of October.
“Starting October 10, 2024, you will not be able to use Chase credit cards to pay third-party Buy Now, Pay Later (‘BNPL’) installment plans,” the company announced via customer credit statements.
“Payments for these installment plans (e.g. Klarna, AfterPay, etc.) using your Chase credit card will be declined.
Buy now, pay later
Buy now, pay later loans are a modern version of reserve plans.
These installment loans, often called “pay in four” loans, allow customers to pay for purchases in a series of four payments.
These payments are typically spread over six weeks.
Buy Now, Pay Later differs from normal credit card charges because consumers are typically not required to pay interest or fees as long as their payments are made on time.
“If your Chase credit card is used for any of these recurring BNPL plans, please update your payment method with your BNPL provider to avoid missed payments or late fees (if applicable).”
WHY THE CHANGE?
The change comes on the heels of an announcement by a federal consumer watchdog agency to regulate Buy Now, Pay Later loans, treating them similarly to credit cards in terms of oversight and rules.
Buy Now, Pay Later services will now face stricter regulations and requirements, so Chase’s move will help reduce the company’s risk.
There has also been an increase in missed payments or defaults on credit cards, making banks more cautious about loans and payment methods.
Additionally, Chase offers its own Buy Now, Pay Later option called Chase Pay Over Time.
The service is available to eligible cardholders when they make purchases of $100 or more or $50 or more on Amazon.
The elimination of third-party options was likely a strategic move to increase customer interest in Chase’s own service.
“Chase is doing something other banks are implementing slowly and methodically: pushing customers toward their own financial products,” said Alex Beene, financial literacy instructor. News week.
“The elimination of third-party programs signals that customers who want a similar process will have to opt-in to Pay Over Time for these purchases in the future.
“This can be annoying for some customers, as the Buy Now, Pay Later setting from other vendors can be more convenient, especially when you are checking out through a retailer. However, in the grand scheme of things, the Chase program allows us to carry out the same concept.”
Chase isn’t the first credit card company to make the change.
At the end of 2020, Capital One no longer allowed customers to use their credit cards for Buy Now, Pay Later.
The bank “encourages its customers to make responsible decisions when it comes to debt repayment,” according to Sarah Strauss, head of customer service and strategy at Capital One.
“Our long-standing policy is not to allow customers to pay other forms of debt with Capital One credit cards, including buy now, pay later loans.”
Experts hope other companies will also make the move to encourage consumers to use their customers’ payment services.
American Express and Citi Bank currently offer customers their own Buy Now, Pay Later options.
In related news, Walmart shoppers can no longer earn rewards with Capital One credit cards.
Additionally, a shopper closed his Macy’s account after receiving a warning about higher credit card fees – this is scamming shoppers.
This story originally appeared on The-sun.com read the full story
