JPMorgan Chase will no longer allow clients to use its credit cards for third-party “Buy Now, Pay Later” services like Affirm, Afterpay, and Klarna. The biggest bank in the U.S. recently started notifying customers about the change, which will come into effect in early October.
“Buy Now, Pay Later” (BNPL) services have been on the rise in recent years, allowing consumers to purchase a product while paying in short-term installments without interest. However, they also attracted a fair share of criticism due to high fees for late payments and for encouraging consumers to buy things they can’t afford.
Notifying its clients about the ban, Chase prompted them to add another payment method to their BNPL account in order to avoid the risk of missing their payments.
In a statement shared with The New York Times, Chase said that BNPL services “are a form of credit” and that the bank generally doesn’t allow the use of its credit cards as a form of payment for other credit products.
Some experts believe that the ban is actually a strategy to encourage Chase customers to turn to the bank’s own BNPL service Chase Pay Over Time. Others have welcomed the decision, saying it serves as a protection for consumers.
“I applaud Chase for the decision because it will protect consumers from becoming overextended,” Adam Rust, director of financial services at the Consumer Federation of America, told The New York Times.