LowCards.com Weekly Credit Card Update–December 9, 2016
The Future of Credit Card Security May Involve Blinking Numbers
Your credit card may start winking at you soon in an effort to keep your data safe. French digital security company Oberthur Technologies has developed a digital display powered by a micro-thin battery. It will change the three or four-digit CVV number–that stands for credit verification value–on the back of credit and debit cards as often as 72 times every 24 hours. Oberthur’s Motion Code technology promises relief to U.S. merchants who haven’t exactly embraced the most recent technology upgrade—security chips built into credit cards. This new development won’t require retailers to buy expensive new hardware to process transactions. Story by Ronald D. White for the Los Angeles Times.
The ‘Hidden’ Credit Card Perk that Could Earn You Up to $2,500
If you’re not using this credit card benefit, you could be leaving money on the table. More than one in four credit cards–including some by American Express and Mastercard–offer “guaranteed returns” to their customers, allowing consumers to return merchandise they bought on the card for a refund, even when the retailer no longer accepts returns. The perk typically works like this: You buy something in a store that only lets you return items within, say, 30 days of the purchase date (a common policy), but on day 31 or later, you realize you don’t like the unused or unworn, tags-still-on item. You then file a claim with your credit card company, which will refund you the purchase price. Typically, these guaranteed return policies stop within 60 to 90 days of purchase and have a monetary cap of $250 to $500 per item and $1,000 to $2,500 a year. Story by Catey Hill for Market Watch.
How to Guess Visa Card Details in Just 6 Seconds
If you shop online, you know how retailers ask for extra credit card information such as a security code to reduce the risk of fraud. In the case of Visa, however, it turns out there’s a way for hackers to guess that card information in mere seconds. The trick, described in a new academic paper, may have been responsible for the hack of thousands of Tesco customers in the U.K. It also shows how online payments remain a weak spot at a time when credit card companies are using chips and other features to tighten up security for in-store transactions. The Visa vulnerability described in the paper works like this: The hackers use bots to submit credit card information to hundreds of retailers at once in order to guess the missing security code information. Since the code is only three numbers, it takes a maximum of 1,000 guesses to crack it. The paper suggests the attack can be carried out in just six seconds. Story by Jeff John Roberts for Fortune.
Dimon Says New Sapphire Card Cuts Profit by Up to $300 Million in Quarter
JPMorgan Chase & Co.’s new Sapphire Reserve credit card will reduce the bank’s profit by $200 million to $300 million in the fourth quarter, according to Chief Executive Officer Jamie Dimon. “The card has been doing great” and was embraced by consumers before the bank did any marketing, Dimon said Tuesday at an investor conference in New York. “Now we have to account for acquisition cost in that business.” JPMorgan introduced the card in August with a 100,000-point sign-up bonus for customers who spend $4,000 in the first three months. The points are worth $1,500 in travel booked through Chase’s website. The cards, which carry a $450 annual fee, were in such demand shortly after the launch that the bank temporarily ran out of the metal it uses to make them. JPMorgan, the biggest U.S. credit-card lender, is expected to post about $5 billion in profit this quarter, according to the average estimate of analysts in a Bloomberg survey. JPMorgan won’t break even on its investment in the Sapphire Reserve card for 5 1/2 years, according to an analysis by Sanford C. Bernstein & Co. Story by Jennifer Surane and Hugh Son for Bloomberg.
Think You Can’t Overdraft a Prepaid Debit Card? Think Again
For many people, one of the main attractions of a prepaid credit card is the fact that, unlike a checking account, they think they have no chance of overdrawing and triggering hefty overdraft fees. But the Consumer Financial Protection Bureau just added strict limits to those fees starting in October 2017. Which may come as a surprise to consumers who didn’t even realize their prepaid cards could ever overdraft. It’s a big change for this burgeoning industry. About $65 billion was loaded on prepaid debit cards in 2012, more than double the amount in 2009. And the CFPB estimates that amount will double again by 2018. The cards are widely sold at stores such as Wal-Mart and 7-Eleven, plus online and in payday lending and check cashing places; and appeal mainly to the “unbanked”–people who for one reason or another abandoned their checking account, had it canceled, or never got one in the first place. Story by Ben Popken for NBC News.
Apple and Square Announce New Payments Partnership
Apple and Square have announced a new partnership that will allow people to add money stored on Square’s virtual card, an app called Square Cash, to their Apple Wallet. This allows users to spend money from Square Cash anywhere that accepts Apple Pay with the tap of their mobile device. The goal is to drive adoption of both services and give consumers better, more secure options than they currently had with credit and debit cards, the executives said. Many people hate the new chip cards because of the time it takes to process transactions. Story by Harriet Taylor for CNBC.
Banks, Retailers Take Swipes at Each Other Over Dodd-Frank Fees
Six years ago, when President Obama signed the Dodd-Frank Act into law, America’s retailers got a big reduction in the debit-card fees they pay banks. Now, with Donald J. Trump set to take office, they’re preparing for a lobbying fight to defend that legislative victory–and the billions they’ve saved as a result. Retail industry trade groups are rallying their base to try to beat back a part of the Financial Choice Act, a bill sponsored by House Financial Services Committee Chairman Jeb Hensarling that advanced in September after a 30-26 vote in an acrimonious panel markup. The measure takes a red pen to the core language of Dodd-Frank, including an amendment by Sen. Richard Durbin, the Illinois Democrat. His measure capped interchange fees–the payments retailers make to banks that issue debit cards whenever a customer swipes. Though Trump’s plan for banking regulation is still unclear, his administration is widely expected to adopt a version of Hensarling’s bill. And if a repeal of the Durbin Amendment survives in the final iteration, that would mean pain for a retail industry already ailing from declines in brick-and-mortar store traffic and a sales slowdown. Prices for consumers would almost certainly go up. Story by Olga Kharif for Bloomberg.
Visa and MasterCard are Delaying the EMV Shift for Gas Stations
The US EMV migration is set to occur in several stages, and the first shift occurred for retailers in October 2015. For gas stations, that deadline was supposed to be set for October 2017. But last week, Visa and MasterCard shifted the deadline for gas stations back to October 2020, giving their fuel clients three additional years to upgrade their pumps. It’s unlikely the migration would have been completed by the deadline. Visa and MasterCard likely opted to push the deadline for this reason. The upgrade is expected to cost the industry roughly $4 billion, because fuel pumps often need to be replaced in their entirety in order to upgrade to EMV. That expense, which gas station owners have complained about, combined with insufficient supply of hardware or software, meant the migration would have been incomplete by 2017. Shifting liability back in light of that could appeal to gas station owners. Story by Business Insider.
Reward Credit Cards: How Much Cash Can You Get?
Forget about that free plane trip or the private dinner with a famous chef. When it comes to collecting rewards from credit cards, most consumers just want cash. Cash-back rewards cards are increasingly popular with shoppers, prompting financial institutions to develop programs that, in some cases, return as much as 10% of spending. But the recent explosion in cash-back cards has some industry executives worried the market is getting overheated. They say the hefty rewards aren’t sustainable for the banks and may not ultimately drive the brand loyalty that is the goal of such programs. Story by Robin Sidel for The Wall Street Journal.
The Invisible Credit Card of the Future
Imagine strolling into your local supermarket, popping your essentials into a basket, heading to the bagging area – where no items are unexpected – and walking out with your weekly shop. There is no need to make a payment, no fiddling with coins, and no placement of a debit or credit card in a terminal. In fact, there is no till at all. This is not casual shoplifting but a realistic prospect of the future way to pay – when technology recognises your presence, scans your shopping, and invisibly takes payment from your account. Credit cards have evolved since 1966, but the basic procedure of payment has remained the same. A card is either handed over, or the number on it is read out or entered into a machine. All that requires the existence of a plastic card, but Amer Sajed, the chief executive of Barclaycard, says this is being replaced by wearable items. At a display for Barclaycard staff, he shows off a plastic ring, a bracelet and a keychain which all contain a chip allowing the shopper to make payments on credit. This, he says, is just a bridge to technology that will see customers identified by their eye or fingerprint, located via their smartphone, and able to shop without queuing up at a checkout. Story by Kevin Peachey for the BBC.
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 14.75 percent, identical to last week’s average. Six months ago, the average was 14.71 percent. One year ago, the average was 14.62 percent.