LowCards.com Weekly Credit Card Update–February 24, 2017
Costco’s Big Credit Card Bet Has Paid Off
About eight months ago, Costco made a move that could have caused a massive disruption in its business. The company completed a long-in-the-works plan to drop its longtime rewards credit card company American Express and replace it with a Visa card supplied by Citigroup. It was a big risk by the company because it wasn’t simply changing which company provided its rewards card. Instead Costco, which has historically only accepted one credit card brand in each global market it operates in, had dropped American Express altogether. That made the move more dangerous for the company because in addition to the possibility that some, maybe a lot, of customers would not want to make the rewards cards switch, it was also possible that some non-rewards American Express customers—likely valuable business customers—would leave the warehouse chain because they might not want to change credit cards. Costco got a better deal for itself and for its customers. Costco made the switch with minimal damage to its reputation, kept its customer base, has added one million new credit card holders, and increased the fees it takes in from the card provider. The company also delivered a 1% increase in U.S. comparable sales in Q1 which it followed with a 3% gain in December, 2016, and a 6% increase in January 2017. Story by Daniel B. Kline for The Motley Fool.
Americans Losing Battle Between Savings, Debt
Only 52% of those surveyed in a new Bankrate Financial Security Index survey have more money in emergency savings than in credit card debt, and 24% of overall respondents have more credit card debt than emergency savings. Millennials are the most likely demographic to have more credit card debt than emergency savings. Twenty-nine percent of millennials, ages 18-36, fit that criterion. Seventeen percent of overall respondents said they have no credit card debt and no savings. One alarming finding in the survey is that 28% of respondents of the Silent Generation, ages 72 and older, had no emergency savings, and that’s the highest percentage of any age group. This is a testament to how many seniors are surviving on a fixed income such as Social Security and a pension with little wiggle room. Story by Jill Cornfield for Fox Business.
Uber Would Have to Allow Drivers to Collect Tips from Credit Cards under a New California Bill
Uber drivers will be allowed to receive tips from passengers through the company’s credit-card-based app through new California state legislation introduced. Assembly Bill 1099 would force companies, such as Uber, that accept payments with credit cards to allow users of the service to tip workers with credit cards as well. Currently, Uber only allows its drivers to receive tips in cash. The legislation wouldn’t only apply to the ride-hailing industry—Uber’s rival Lyft already allows drivers to receive tips through its app—but also nail salons, spas and all other businesses accepting credit card payments. The measure was the first step in what could ultimately be a broader bill that would allow workers in the so-called gig economy to organize. Negotiations between the ride-hailing industry and labor unions were ongoing, she said, and she hoped an agreement could be reached on issues such as workers compensation, unemployment and Social Security benefits. Story by Liam Dillon for The Los Angeles Times.
Billion Dollar Rematch Over Debit Card Fees
Consumers are again at the center of a fight over debit card fees. What’s debatable is how much the battle actually has to do with consumers. Banks and retailers are preparing to battle over billions of dollars in debit card fee revenue that the government transferred to merchants from banks as part of the 2010 Dodd-Frank Act. Now, inspired by a Republican sweep in the 2016 U.S. election, banks and other card companies are fighting to get those fees back. Before the Dodd-Frank changes, debit card “interchange” fees were set by the card networks, including Visa and Mastercard, that counted the banks as both customers and shareholders. Merchants pay the fees to card issuers whenever a consumer uses a debit card to purchase something. After the financial crisis, Dodd-Frank’s Durbin amendment capped those fees. But if House Republicans propose doing away with the Durbin amendment, retailer groups “will be putting up a big fight.” Story by AnnaMaria Andiotis for The Wall Street Journal.
Verizon Slashes Offer Price for Yahoo over Data Breaches
Verizon Communications is slicing $350 million off its acquisition offer for Yahoo after the internet company revealed a series of data breaches affecting more than a billion customers. The deal is now worth $4.48 billion, down from the $4.83 billion Verizon first proposed last summer. The buyout includes Yahoo’s core Internet businesses—news, sports, entertainment, finance and email—but excludes the company’s stake in Chinese e-commerce giant Alibaba and certain company patents. The deal is expected to close in the second quarter of 2017. Story by Irina Ivanova for CBS News.
One in Four Americans Have Been Victims of Healthcare Data Breach
One in four Americans (26%) have had their medical information stolen, and these breaches can be quite costly. Half the victims had to pay an average of $2,500 in out-of-pocket costs per incident. The study found that hospitals accounted for 36% of these breaches. Urgent care clinics (22%), pharmacies (22%), physician’s offices (21%) and health insurers (21%) rounded out the list. Among those who experienced a breach, 50% were victims of medical identity theft. Information taken in the breaches included social security numbers (31%), contact information (31%) or medical data (31%). Unlike credit card identity theft, where a card issuer has a legal responsibility to cover losses above $50, medical identity theft victims do not have an automatic right to recover losses. Story by Bill Hardekopf for LowCards.com.
Mastercard Partners Boingo on Provision of Wi-Fi Access to Cardholders
Mastercard and Boingo Wireless are providing Mastercard cardholders unlimited access to more than one million premium Boingo Wi-Fi hotspots around the world. The Wi-Fi service is now available for select HSBC Mastercard cardholders in Argentina, China, Hong Kong, Malaysia, Singapore, United Arab Emirates and the U.K. at no additional cost. As a result, these cardholders have the potential to save each year on roaming charges and subscriptions when accessing Wi-Fi hotspot locations in airports, hotels, restaurants and cafes, inflight and more. Travel-and connectivity while traveling-is an increasing priority among people around the world. On the ground, more than half of the wealthiest travelers say that complimentary Wi-Fi is the top “desirable amenity” for them. In the air, 63 percent of travelers access entertainment services on their own device while flying, and this trend is only going to grow. Story in Finextra.
Amazon Looking to Buy Capital One?
Amazon is rumoured to be pondering the acquisition of Capital One. Capital One, which pioneered the mass marketing of credit cards in the 1990s, is among the top ten bank holding companies in the US ranked by assets and deposits. The bank has 800+ domestic branches, including around ten Capital One Café locations (coffee-shop style), and over 2,000 ATMs. It also conducts business in Canada and the UK. In 2015, 62% of the company’s revenues were from credit cards, 28% was from consumer banking, and 10% was from commercial banking. Capital One is also one of the largest users of Amazon’s AWS cloud in the financial services space. Capital One would bring Amazon a huge credit card portfolio, which seems to be a natural fit for its business. Capital One is also a fully-fledged bank. Amazon is already a merchant, payment processor and a credit card issuer. With the acquisition of Capital One, Amazon would also become the acquirer—i.e. the merchant’s bank. It could offer this service to all of the merchants participating in its ecosystem. Story by Tanya Andreasyan for Banking Technology.
How Mobile Banking in Emerging Markets Can Combat Poverty Worldwide
Mobile banking in emerging markets is evolving quickly as adoption rates continue to rise. That might surprise consumers in developed countries, where the growth of mobile banking and mobile money lagged behind many other financial vehicles for years, but users in developing countries see mobile as a solution to many personal finance problems. For consumers with limited access to traditional banking solutions, mobile technology opens the door to new possibilities and greater economic prospects. For financial institutions, meanwhile, it creates more opportunities by expanding the global population of communities where banking products and services can be profitable. Story by Jonathan Crowl for Mobile Business Insights.
New York Industrial Board of Appeals Rescinds Payroll Debit Card and Direct Deposit Regulations
Regulations that would have restricted New York employers’ ability to pay employees via payroll debit cards have been struck down by an administrative review tribunal within the State Department of Labor. Barring further regulatory or statutory action, employers remain free to use payroll debit cards subject to existing rules. Story by Seyfarth Shaw for Lexology.
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 14.99 percent, identical to last week. Six months ago, the average was 14.64 percent. One year ago, the average was 14.83 percent.