LowCards.com Weekly Credit Card Update–August 7, 2015
Using a Digital Wallet May Cost You in Credit Card Rewards
Mobile payments are surging as an alternative payment method, with Forrester Research estimating that the industry will nearly triple in terms of transactions by 2019. Digital wallets are typically free to use, but if you’re doing so with a credit card that offers bonus rewards on certain spending categories, your digital wallet may still be costing you money. Credit card companies rely on merchant category codes to determine whether your purchase qualifies for certain bonus rewards your card offers. MCCs are assigned by the four major payment networks depending on the nature of the merchant. For example, a grocery store purchase will likely be coded as 5411, according to the MCC list provided by the IRS. However, if you purchase groceries from an online retailer such as Amazon, your purchase will likely generate a different MCC because Amazon’s primary business isn’t selling groceries. Story by Ben Luthi for Nerd Wallet.
Card Fraud Losses Hit $16 Billion Worldwide
Worldwide fraud losses on credit cards, debit cards and prepaid cards hit $16.31 billion in 2014 on a total card sales volume of $28.844 trillion. This translates to a rate of 5.65 cents in fraud losses per every $100 in volume. In addition, fraud grew by 19% last year, while overall volume only grew by 15%. Nilson reported that U.S. fraud losses reached 12.75 cents for every $100 in volume annually, and that the U.S. accounted for 48.2% of the world’s card fraud losses. At the same time, the U.S. only contributed 21.4% of the world’s overall card sales volume. Story by David Morrison for the Credit Union Times.
How We Pay: Digital Payments Rise, But Cash is Still King
More Americans are making digital payments but traditional payment methods are still overwhelmingly preferred. Cash is still king. In the last year, 93% of shoppers reported using cash, while 68% said they used debit cards. Checks were also used by 68% of the respondents, and 67% used credit cards. PayPal ranked the highest of all digital payment platforms, with 62% of respondents saying they had used this service in the past year. One in seven respondents (14%) made a mobile payment in the past year. In fact, 68% of mobile payment users said they were using more alternative payment methods than they were a year ago. Cash and checks saw the greatest drop in use among these mobile payment users. Story by Bill Hardekopf for LowCards.com.
Judge Reinstates ATM Antitrust Case Against Visa, MasterCard
The District of Columbia Circuit Court of Appeals on Tuesday reinstated an antitrust lawsuit brought against Visa Inc. and MasterCard Inc. by a trade association of ATM operators. Consumers, independent ATM operators and the National ATM Council filed the lawsuit in 2011. They alleged Visa’s and MasterCard’s ATM-fee policies suppressed competition because they barred ATM operators from offering discounts to customers who complete transactions over less-costly payment networks. In 2013, a federal judge in a 39-page ruling, found several problems with the lawsuits and dismissed them. Story by Angela Chen for The Wall Street Journal.
Small Businesses Not Yet Ready for New Secure Card Payment System
October 1 is an important date for businesses that accept credit cards. That’s when a new rule takes effect, shifting the liability for fraudulent credit card purchases from the banks to the business making the sale, if it has not installed EMV chip card technology. Unfortunately, a survey by Wells Fargo shows small businesses, by and large, are not only unprepared–they aren’t aware of what’s coming. Just 49% of small business owners who accept point-of-sale card payments today report being aware of the impending liability shift, when a card issuer or merchant that does not support EMV chip card technology will assume liability for any fraudulent point-of-sale card transactions. Story by Mark Huffman for Consumer Affairs.
Hackers Turn Square Hardware into Device to Steal Credit Card Information
Just because the Square Reader is new doesn’t mean it isn’t susceptible to the same scams as old school ATMs and credit card readers. A team said it discovered a way to steal credit card information using a modified Square magnetic stripe reader. By tampering with the magstripe reader, the team was able to turn Square’s hardware into a credit card skimmer, a device that can be used to steal credit card information. The modified reader doesn’t work with the proprietary Square app The modified reader doesn’t work with the proprietary Square app, but it could be used to steal credit card information using a custom-recording app, according to the team behind the hardware hack. The team also claims that the modification of Square’s hardware only takes 10 minutes and can be done with household tools. Story by Chris Perkins for Mashable.
Scott Walker Carrying Credit Card Debt with 27% Interest Rate
Gov. Scott Walker has a high-interest credit card with a more than 27% interest rate, his recently filed financial report shows. Walker’s form shows the card was issued by Barclays last year, and he owed as much as $10,000 to $15,000 at some point during the reporting period. Candidates must report liabilities of more than $10,000 owed to any creditor at any time during that time, and it must include the debts of a spouse and dependent children. That interest rate–27.24%–is notably high. Story by Mary Spicuzza and Jason Stein for the Milwaukee Journal Sentinel.
China Curbs Online Payment in Fresh Blow to Internet Finance
China plans to tighten regulations governing the nation’s 270 online-payment firms, dealing another blow to the booming business of Internet finance. Under draft rules, the central bank will limit the amount an individual can pay online to 5,000 yuan ($805) per day through third-party payment accounts, unless the customer’s identity can be verified by a security token and electronic signature. The People’s Bank of China is seeking public feedback by Aug. 28. The central bank last month imposed stricter rules on the industry, which analysts expected to lead to sweeping changes and failures among online lenders. Internet finance is posing a rising challenge to China’s traditional banks, which have lobbied for more regulation on third-party payments and peer-to-peer lending platforms. Story in Bloomberg.
AmEx Judge Rejects Merchant Settlement Over Card Fee Rules
A U.S. judge rejected American Express Company’s settlement with merchants over credit card fees after finding the plaintiffs’ lawyer tainted the deal by exchanging confidential information with an attorney for MasterCard. The rejection means that merchants and the card firm may have to renegotiate the deal or possibly go to trial. A conference is scheduled in Brooklyn, New York federal court for Oct. 5 to discuss the next steps. Story by Christie Smythe for Bloomberg.
LowCards.com Weekly Credit Card Rate Report
Based on the 1,000+ cards in the LowCards.com Complete Credit Card Index, the average advertised APR for credit cards is 14.68 percent, identical to last week. Six months ago, the average was 14.40 percent. One year ago, the average was 14.49 percent.