LowCards.com Weekly Credit Card Update–December 23, 2015
How Apple’s Trojan Horse Will Eat the Credit Card Industry
Apple Pay was launched last year, with lots of fanfare and support by the credit card industry. Partnering with the banks that issue credit cards overcame the resistance that early entrants in mobile payments had faced. It also solved critical technology and infrastructure problems and offered the credit-card industry a new avenue for growth. Apple Pay isn’t a household name yet, but it is growing steadily and is likely to become one. Most recently, Apple announced a deal with China’s UnionPay, the state-run sole issuer of bankcards, to allow it to operate nationwide in the People’s Republic. Apple Pay is, however, a Trojan horse. Once Apple has established its platform, it won’t need the banks and credit cards any more. It will be able take advantage of another new technology, the blockchain, to offer an alternative payment option. Blockchain is the core technology behind Bitcoin, and functions as a transparent ledger of transactions, concurrently hosted on numerous computers around the world–allowing the creation of digital currencies and virtual banks. Story by Vivek Wadhwa for the Washington Post.
The Costly Conditions of Zero-Interest Credit Cards
As shoppers rush to finish their holiday gift buying, they’re likely to encounter enticing offers to purchase goods with so-called zero-interest credit cards. But there’s good reason to be cautious about signing up. The cards, offered by many major retailers, promote the purchase of expensive items with no interest owed during a defined period, typically from six to 12 months. The cards can help consumers pay for larger purchases over time. But there’s a catch. If the purchase isn’t paid in full at the end of the promotional period, the buyer is charged interest retroactively, often at a very high rate. Sometimes, the interest is charged on the entire purchase price, even if the consumer has made partial payments toward principal. Story by Ann Carrns for The New York Times.
Nigeria Bans Credit Card Use Abroad
Nigeria’s central bank has ordered commercial banks to stop customers from using their debit and credit cards abroad, a source has told the BBC. One bank has emailed customers to this effect, stressing it is a “temporary measure”. Access to foreign online retailers will also be affected when the ban takes effect on 1 January 2016. It is part of the government’s effort to try to stem the flow of foreign exchange out of the country. The unofficial value of the Nigerian currency, the naira, has plunged because of the fall in the oil price, its main export. Story in the BBC.
European Credit Card Terminals Are Plagued with Serious Vulnerabilities
As the United States prepares to move to a chip-and-pin model for credit card transactions, Europe has been happily using the generally more secure method of in-person transactions for years. But it was only a matter of time before some really serious issues were discovered in the European approach. As shown today on German news program Tagesschau, researchers in an upcoming talk at the Chaos Communication Congress later this month will detail an array of vulnerabilities and shoddy design choices with payment terminals (the devices consumers insert their cards into before typing a four-digit PIN) used in Europe. These allow a hacker to steal a victim’s PIN code and magnetic strip from their card, and even pose as any terminal and send funds to any bank account in Germany. There are also concerns that the vulnerabilities could affect systems in other European countries. Story by Joseph Cox for Motherboard.
For Sex Industry, Bitcoin Steps In Where Credit Cards Fear To Tread
Across the country, law enforcement is cracking down on sex trafficking of minors by going after online escort ads. Five years ago, Craigslist was pressured to shut down its adult-services forum. The new target is Backpage.com–Visa and MasterCard stopped processing transactions with Backpage this summer. Some in the sex industry are getting around that by using the virtual currency bitcoin. That’s the latest adaptation by an industry used to getting creative to avoid detection. That’s where bitcoin comes in. It’s a cyber currency that’s sold peer to peer. There’s no central bank, but there’s an online ledger where transactions are recorded. Some bitcoin fans hope Backpage’s credit card obstacle might become bitcoin’s boon. Story by Sasha Aslanian for NPR.
Data Breach at Landry’s Restaurants
Landry’s, Inc., the parent company of restaurants such as Landry’s Seafood, Claim Jumper, McCormick & Schmick’s and Rainforest Cafe, announced it had received reports of unauthorized charges made to credit cards used at some of their establishments. The stolen information seemed to be obtained from the data contained in the magnetic stripe on the back of payment cards. This data included the cardholder’s name, card number, expiration date and internal verification code. Landry’s said in its statement that this information is generally used to make fraudulent charges, so it is unlikely that criminals will use it for identity theft. Story by Natalie Rutledge for LowCards.com.
Congress Takes Aim at Millions in Fraud on Government Credit Cards
Congress has long struggled to prevent the fraudulent use of government credit cards, and now Senate lawmakers think it’s time for another crackdown on the millions of dollars of waste seen each year. Late Wednesday night the chamber approved by unanimous consent Democratic legislation directing the General Services Administration (GSA) to create an Office of Federal Charge Card Analytics and Review, which would be responsible for supervising how federal agencies and program use their plastic to make purchases. Story by Martin Matishak for The Fiscal Times.
Target in Initial Development of Own Mobile Wallet
Target is in the early stages of developing its own mobile wallet, three people familiar with the matter said, joining Wal-Mart Stores in posing a threat to recent entrants like Apple Pay. The fourth-largest U.S. retailer has not committed to launch the product, which would allow customers to pay for goods using an app on their mobile phones. The mobile wallet could launch as early as next year, but it is too early to predict. Target’s team has made some decisions, including to partner with credit card companies, and they are in favor of processing transactions using scanning technology to communicate with payment terminals. However, Target has not tested the wallet in its stores so far, said the third source, who was not authorized to disclose the details. Story by Nandita Bose for Reuters.
Stratos CEO Sells the Company to Keep its Smart Credit Card Alive
Stratos, one of a number of startups trying to combine all your credit, debit, and gift cards into one supremely capable smart card, has been sold to a company called Ciright One LLC. Stratos cards will “continue to function as they always have” under the new ownership, according to Stratos CEO Thiago Olson. Ciright will also manage and fulfill any Stratos card orders that haven’t been filled. Further terms of the deal have not been disclosed. Stratos was struggling, and the company lost a recent round of funding, so Olson paused operations and looked at restructuring. He then struck a deal with Ciright One, a Pennsylvania-based smart card company that has been working on a very similar idea to the Stratos card. Story by Sean O’Kane for The Verge.
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 14.87 percent, significantly higher than last week’s average of 14.62 percent. Six months ago, the average was 14.62 percent. One year ago, the average was 14.46 percent.