LowCards.com Weekly Credit Card Update October 26
Credit Card Settlement Could Stymie PayPal’s Retail Plans
A provision within the hotly-contested settlement between merchants and credit card networks could potentially slow PayPal’s bid to become more widely accepted at grocery stores, restaurants and other retailers. Retailers that choose to add a surcharge to customers that pay with plastic must add the surcharge on all types of electronic payments–including PayPal, which currently prohibits merchants from surcharging its clients. If nothing changes, retailers would have little choice but to shut PayPal out, attorneys for retailers say. PayPal has plans to expand through a partnership with Discover that would let consumers use PayPal at roughly seven million U.S. merchants where Discover is accepted. Story by Sean Sposito for the American Banker.
Protecting Credit Cards and Bank Accounts from Hackers
Data breaches and credit card fraud are becoming common occurrences. This week’s revelation that hackers stole credit card information from 63 Barnes & Noble stores is just the latest reminder. Credit card fraud is not just isolated to the United States. A new global study by ACI Worldwide and Aite Group shows that one in four respondents have been a victim of credit, debit or prepaid card fraud during the past five years. Residents of Mexico and the United States have the highest percentage of direct experience with card fraud, at 44 and 42 percent respectively. The study, conducted with more than 5,200 consumers across 17 countries, showed credit card usage declines after someone has been a victim of credit fraud. Cardholders who received replacement cards used the new card 46 percent less than the original card. More than 50 percent of victims used cash or another form of payment instead of a credit or debit card. Story by Bill Hardekopf for LowCards.com.
New Federal Rules for Debt Collectors
Debt collection agencies will come under federal supervision when the Consumer Financial Protection Bureau begins oversight on January 2. The CFPB will begin monitoring debt collectors that contract with the Education Department to collect overdue student loans. The consumer agency will examine companies to ensure they properly identify themselves to consumers and properly disclose the amount of debt owed. In addition, collectors must have a process to resolve disputes and communicate “civilly and honestly” with consumers. Story by Edward Wyatt for the New York Times.
Target Sells U.S. Credit Card Portfolio to TD Bank
Canada’s Toronto-Dominion Bank said it has agreed to buy the $5.9-billion credit card portfolio of retailing giant Target, a deal that significantly expands the Canadian lender’s push south of the border. TD Bank will become the exclusive issuer of Target-branded Visa and private-label consumer credit cards to Target’s U.S. customers. The bank has been on the prowl for U.S. assets, amid worry in Canada that the domestic banking market is headed for slower growth. Canadian banks–which survived the global financial and economic crisis relatively unscathed and with a comfortable cushion of capital—have been venturing south. Story by Caroline Van Hassalt for the Wall Street Journal.
Another Advancement for Mobile Payments
After months of delays, mobile payment took another step forward this week with the launch of the Isis system in Salt Lake City and Austin. Isis allows consumers to make payments with their smartphone by waving it at a check-out terminal. Wireless carriers are testing the Isis Mobile Wallet and attempting to ignite the adoption of mobile payment systems that have been slow to find success in the United States. The tests in Austin and Salt Lake City are starting small: 500 retailers can accept Isis in Salt Lake City and 470 in Austin. According to Computerworld, there are approximately 200,000 of the newer point-of-sale terminals that accept mobile payments in place in the United States, a very small percentage of retail stores. That number could grow significantly over the next three years as retailers could pay a penalty if they don’t upgrade to point-of-sale terminals with better security by October 2015. Story by John Oldshue for LowCards.com.
Creeping Theater Thief Costs Moviegoers Tens of Thousands in Credit Card Fraud
A man who may have stolen as much as $70,000 a week by slithering beneath theater seats while movies were playing and lifting credit cards from women’s’ pocketbooks was convicted Monday of fraud and identity theft crimes. Anthony Johnson, 49, used the stolen cards to collect thousands of dollars in cash advances from Connecticut’s gambling casinos and to make tens of thousands of dollars more in retail purchases. On a “good” weekend, Johnson collected $50,000 to $70,000 from the scheme. He had to settle for $30,000 or $40,000 on a bad weekend, an accomplice said. Story by Edmund Mahony for the Hartford Courant.
Visa Swipes Boss from J.P. Morgan
Visa named J.P. Morgan Chase executive Charles Scharf its next chief executive Wednesday. Scharf, a former Visa board member, ran the retail bank at J.P. Morgan for several years before being moved to the bank’s private-equity unit in 2011. He had once been considered a possible successor to J.P. Morgan CEO James Dimon. Story by Robin Sidel for the Wall Street Journal.
Canada Clamps Down on Prepaid Credit
Canada’s federal finance minister announced Wednesday that prepaid credit cards can no longer expire and must openly disclose all fees and conditions. Prepaid credit cards are relatively new to Canada, but now need to be as transparent as other financial tools. Story by United Press International.
LowCards.com Weekly Credit Card Rate Report
Based on the 1000+ cards in the LowCards.com Complete Credit Card Index, the average advertised APR for credit cards is 14.26 percent, slightly below last week’s average of 14.28 percent. Six months ago, the average was 14.27 percent. One year ago, the average was 14.16 percent.