Chase stops customers using credit cards to make BNPL instalment payments

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? 

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.

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.  

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.

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?

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. 

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