I would think that Chase probably makes money on this, on aggregate scale. Yes, they are willing to absorb approximately one percent commission on credit card orders (provided that average VISA / MC discount rate for large merchants is around 2 percent, and the merchant's bank gets approximately one half of this fee -- and Chase obviously is both the bank and the merchant) and give you free shipping (valued at around 5-6 dollars, I'd say). Of course, this is not a free lunch, and they get (1) interest on the purchase amount effective from the day the credit card transaction is processed until the day the Travellers Cheques are deposited for collection (and in many cases, this period is rather lengthy), and (2) many Travellers Cheques never get cashed in the first place, which adds tremendously to their bottom line.

On average, they make money on these transactions. Yet, it makes good sense for them to track customers that cash the TCs right away; it also is a potential problem, as in many instances credit card companies give you different limits for purchase and cash advance transaction, and this option from Chase allows a small percentage of people to abuse the system, making us to pay higher fees in the very end.

I, for one, think that Chase is acting rather foolishly, as this creates a lot of bad will and customer service problems. If such loopholes exist, then paying some of the Chase top executives million dollar salaries is not justified, and we, as consumers, are actually teaching them a good lesson, as far as their policies are concerned.