LowCards.com Weekly Credit Card Update–December 11, 2015
Costco Earnings Hurt by Credit Card Switch
Costco’s breakup with American Express is exposing a behind-the-scenes revenue source for retailers that promote co-branded cards: finders fees. After 16 years of exclusive relationship with American Express, Costco decided earlier this year to switch its U.S. credit-card contract to Citigroup and Visa. Although the switch to new cards won’t occur until after March 31, Amex has stopped offering a co-branded card. The switch is chipping away at Costco’s profits, as it no longer is receiving a bounty for each new Amex cardholder it signs up and Visa won’t offer a new card until next year. On Tuesday, the warehouse retailer reported a drop in quarterly earnings and slowing revenue from membership fees. Shares fell 5.4% in New York trading Wednesday. Story by Sarah Nassauer for MarketWatch.
Wal-Mart Adds to Mobile Wallet Frenzy with ‘Walmart Pay’
Wal-Mart Stores launched its own mobile payment service Walmart Pay on Thursday, potentially dealing a sharp blow to the ambitions of a mobile wallet the company had been co-developing with a consortium of retailers. The mobile payments space in the U.S. has seen a flurry of new launches and partnerships in the past year but has failed to gain traction as customer and merchant adoption have been sluggish. CurrentC, whose developers included Wal-Mart, Target and Best Buy among others, was likely to prove strong competition to Apple Pay because it was developed as a single payment solution that could be used at many retailers and integrate their loyalty programs. But years of delay, a data breach and management changes hurt its prospects. An increasingly bigger worry for CurrentC is the end of its exclusive partnership with most of its members, which means they can now accept other mobile payment options at their stores. Story by Sruthi Ramakrishnan and Nandita Bose for Reuters.
Chip Credit Cards Give Retailers Another Grievance Against Banks
The new chip cards are at the center of a growing dispute that has pitted two of America’s most prominent industries–banking and retailing—against each other, and pulled in attorneys general and even the Federal Bureau of Investigation in the process. But the debate involves more than whether consumers will be adequately protected during a season that has been rife with security breaches: The battle could affect the long-simmering war over the billions of dollars in interchange fees that merchants pay to process credit and debit transactions. “That is the crux of the matter,” said David Robertson, publisher of The Nilson Report, a payments industry publication. “The real savings is not about fraud, the real savings is about interchange.” Last year, merchants paid about $61 billion in interchange fees, Mr. Robertson said, compared with about $30 billion in fraud losses. Story by Rachel Abrams for The New York Times.
30% of Financial Services Companies Put Customer Data at Risk
Our personal and financial data could be at risk because many finance industry professionals are not given unique login and password details, according to a financial services compliance report by IS Decisions. The report showed 29% of personnel in the financial services industry do not have unique login credentials, which is a basic security requirement. In addition to endangering clients’ personal information, it also increases the threat of insider trading. Additionally, 23% of employees are not required to logon to their employer’s network to access data, even though this is a requirement of nearly all regulations. Story by Bill Hardekopf for LowCards.com.
If Europe Can Rein in Credit Card Fees, Why Not Us?
Most consumers don’t know it, but there’s a hidden fee that raises the price of almost everything they buy. Every time a shopper swipes a credit card, the bank charges the merchant for processing the transaction. The “swipe fee” doesn’t sound like much at an average of only 2 percent, but adds up to more than $50 billion a year that gets added to the price of merchandise–$1 on every $50 purchase or more than $400 per household every year. Visa and MasterCard also dominate the European market, but the European Union has decided to stand up to these giants. In December, Europe will begin enforcing new antitrust rules that make the market more competitive and ban the type of price-fixing the card companies engage in at home. Under the new rules, swipe fees on European credit cards will be limited to 0.3 percent of each transaction, with swipe fees on debit cards limited to 0.2 percent. Story by Mallory Duncan for The Hill.
Fight Against Terror: Company to Stop Selling Anonymous Prepaid Cards
Anonymous prepaid cards for mobile telephones will soon be a thing of the past in Luxembourg. Given the attacks in Paris, the sale will be prohibited for safety reasons, Prime Minister Xavier Bettel announced during a Wednesday press briefing. Join, one of four telecom providers in Luxembourg, has decided to no longer sell anonymous prepaid cards. Both online stores, as well as Luxembourg and Belgium branches, will be affected. To obtain a prepaid card, the customer will be required to disclose their identity in the future. Story in the Luxemburger Wort.
Mobile Banking On The Rise, Thanks To Tech-Savvy Millennials
The future of banking looks bright, at least for consumers. Tech-savvy millennials are opting for online and mobile banking options over visiting local branches, which will significantly change the way banks do business. Traditionally, banks have relied heavily on in-person interactions to push products and make sales, but that approach is often better for the bank’s bottom line than for the customer’s. Banking representatives usually earn sales commissions, which means a customer who walks into a local branch might walk out with an unneeded loan or mutual fund. An increasing number of technology firms are creating digital solutions to the everyday financial problems Americans face, making it easier to avoid the headaches and fees associated with traditional banking. Removing the human touch might leave some nostalgic for a friendlier age, but it could lead to greater wealth accumulation as consumers make decisions based on data, rather than a handshake. Story by Lauren Lyons Cole for International Business Times.
A Third of Businesses Use Mobile Banking to Make Payments
Not only does every other top manager make payments from corporate accounts via mobile banking, but it was also discovered that over 30 percent of companies use mobile devices to access corporate bank accounts and to make financial transactions. Those are the result of a recent joint survey conducted by Kaspersky Lab and B2B International. The survey concluded that business representatives were increasingly making financial transactions with the help of mobile devices. In particular, 28 percent of small and medium companies, and 34 percent of enterprises, conducted financial transactions via mobile devices. Hackers also know this, and are increasingly targeting mobile platforms. In fact, in the third quarter of 2015, Kaspersky Lab products for mobile devices detected more than 300,000 new malicious programs. Story by Sead Fadilpasic for Beta News.
Cost of Living and Debt, State By State
It’s no coincidence that many states with a high cost of living are also home to people carrying the most debt. Residents of Alaska and Hawaii, which are notoriously expensive places to live, have the highest average consumer credit card debt of all states. Meanwhile, residents of Washington, D.C., and California carry the most mortgage debt on average. A family can live comfortably in Georgia or Ohio on an income of $75,000 a year, but it might take $125,000 in places like Connecticut or New Jersey. For many Americans, income and cost of living are moving further apart. The U.S. has seen a decline in affordability relative to income growth and that has been an important factor in rising debt levels. The cost of living across the U.S. has increased 29% since 2003, but median income has grown 26% in that time, according to NerdWallet’s latest study on household debt. Story by Sreekar Jasthi for Nerd Wallet.
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 14.62 percent, slightly lower than last week’s average of 14.63 percent. Six months ago, the average was 14.60 percent. One year ago, the average was 14.46 percent.