LowCards.com Weekly Credit Card Update–March 6, 2015
Retailers Face $8.65 Billion Bill for New Generation of Credit Cards
New technology about to be deployed by credit card companies will require U.S. consumers to carry a new kind of card and retailers across the nation to upgrade payment terminals. But despite a price tag of $8.65 billion, the shift will address only a narrow range of security issues. Credit card companies have set an October deadline for the switch to chip-enabled cards, which come with embedded computer chips that make them far more difficult to clone. Counterfeit cards, however, account for only about 37% of credit card fraud, and the new technology will be nearly as vulnerable to other kinds of hacking and cyber attacks as current swipe-card systems, security experts say. Story by Reuters.
Credit Cards Breached at Luxury Mandarin Oriental Hotels
The credit cards of customers at multiple Mandarin Oriental hotel locations in the United States and Europe have been accessed and used after a security breach, the luxury hotel chain announced Thursday. It’s unclear how many customers and hotels were affected by the breach, which likely took place before Christmas 2014. The group operates about two dozen locations worldwide, including hotels in Boston, Florida, Las Vegas, Miami, New York, and Washington, D.C. The hotel said only credit card data, not personal information was compromised. Story by Danielle Haynes for UPI.
Citi and Visa Win Credit Card Deal with Costco
Costco announced that it will enter into a new co-brand credit card program with Citi, with Visa replacing American Express as the card network. Costco stated on February 12 that it was ending its exclusive relationship with American Express in the retailer’s United States stores on March 31, 2016. In order for the deal to be official, Citi must buy Costco’s co-branded card portfolio. If that takes place, then Citi’s agreement will go into effect the day after the American Express contract ends–April 1, 2016. This will impact cards for stores in the United States and Puerto Rico. Story by Bill Hardekopf for LowCards.com.
Card Offers Get Better as More Turn to Credit
Credit card companies are pelting consumers with more, and better, sign-up offers as Americans show their highest tolerance for debt in years. In a sign of growing confidence and economic recovery, consumer credit card debt reached its highest level in nearly five years in December, and almost entirely from credit card origination, not higher balances on existing cards, according to a February report from credit reporting agency Equifax. Overall credit card debt rose to $642 billion in December, up nearly 6% from $607 billion in December 2013, according to Equifax’s analysis of more than 210 million consumer accounts. That’s the highest it’s been since April 2010. Story by Hadley Malcolm for USA Today.
Stratos Smart Card Combines Credit, ATM, Loyalty All in One
Smartphone-based payments like Apple Pay might be the buzzworthy tech of the moment, but it’s not likely your phone is going to replace your ATM card, your company ID card, and all your loyalty and gift cards all at once. Stratos is a new smart card that, like competitors Coin and Plastc aims to combine all those cards into one. The creators of Stratos, however, focused on maximum point-of-service compatibility (they claim 100 percent) and ease of use — not to mention shipping their product ahead of the others in order to get their foot in the door. Stratos, like the other cards, has a magnetic stripe that can rewrite itself, letting it imitate your other cards, which you scan with a dongle. Story by Devin Coldewey for NBC News.
Fraud Comes to Apple Pay
It didn’t take long for fraud to find its way to Apple Pay. Some banks are seeing a growing incidence of fraud on Apple’s mobile-payment service as criminals exploit vulnerabilities in the verification process of adding a credit card, according to people familiar with the matter. Banks are tightening the verification process in an attempt to curb the fraud, these people said, declining to be identified citing a confidentiality agreement with Apple. Story by Daisuke Wakabayashi and Robin Sidel for The Wall Street Journal.
Credit Card Balances Reach 6-Year High
Credit card balances grew approximately 5% in 2014, the highest growth rate since the economy crashed in 2008. The report from TransUnion showed that 157 million consumers had access to a credit card during the fourth quarter of 2014, which is 7 million more than the fourth quarter of 2013. The average card balance per consumer did not vary from 2013 to 2014. The numbers moved from $5,330 per account in 2013 to $5,327 in 2014. TransUnion found consumers in the subprime and near prime credit tiers led to the majority of the growth in credit card balances during 2014. Story by John Oldshue for LowCards.com.
Google, PayPal Heat Up Mobile Payments Fray
PayPal and Google announced moves Monday to better position themselves for the expected growth in popularity of mobile payments.PayPal, the digital payments unit being spun off from eBay later this year, announced Monday it would acquire Paydiant, a startup that helps companies such as Subway and Capitol One build mobile payments options. Paydiant is part of Merchant Customer Exchange, a consortium of major retailers working to launch the CurrentC mobile wallet later this year. Also Monday, Google took the wraps off a mobile payment service called Android Pay that will compete with Apple Pay and Samsung Pay, a service unveiled Sunday at the Mobile World Congress in Barcelona. Like Apple and Samsung’s versions, Android Pay will use near-field communications, or NFC, a technology that uses an embedded chip to talk with compatible registers. But unlike Apple and Samsung’s services, Android Pay will not be a standalone app, serving instead as the platform for third-party store and payment apps. Story by Steven Musil for CNet.
CitiGroup Reaches Deal with MasterCard on Consumer Cards
Citigroup reached a deal to issue most of its global consumer credit and debit cards on MasterCard’s network. As part of a 10-year agreement, New York-based Citigroup will start to shift more of its consumer business to MasterCard this year, the companies said in a statement Wednesday. The bank said it will continue to issue co-brand and commercial cards on other networks. The terms weren’t disclosed. Story by Elizabeth Dexheimer 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 14.46 percent, slightly above last week’s average of 14.45 percent. Six months ago, the average was 14.47 percent. One year ago, the average was 14.48 percent.