LowCards.com Weekly Credit Card Update–January 27, 2017
Apple Pay Records 50% Growth in 2016, as Mobile Apps and Websites Prove Most Popular
The number of monthly US Apple Pay credit card transactions conducted in-app, online and at the in-store point of sale grew by 50% between December 2015 and December 2016, research released by consumer spending analytics portal TXN reveals, with mobile apps and websites attracting the highest proportion of transactions. US convenience store chain Duane Reade has the highest proportion of Apple Pay credit card transactions out of all supporting in-store locations with 1.80%, followed by supermarket chain Whole Foods with 1.70%. All other in-store retailers have Apple Pay transaction volumes of less than 1%. Starbucks falls in last place with just over 0.40%. Story by Rian Boden for NFC World.
Costco has Become a Major Driver of Citi’s Business
Citigroup’s acquisition of Costco’s co-branded credit card portfolio from Amex in June 2016 continues to pay off. In its Q4 2016 earnings release, Citi posted 8% overall revenue growth on a constant-currency basis. The Costco portfolio appears to be a major driver of Citi’s overall growth right now. Costco cards are still driving massive spending. The customer base, which likely totals roughly 12 million, saw over $52 billion in purchase sales in its first six months, and over $6 billion in loan growth, according to the firm’s earnings call. That’s really strong performance—for context, Amex saw roughly $80 billion in Costco billed business in 2015, which puts Citi’s annual run rate roughly $24 billion ahead of the Amex card. That’s propelling growth in Citi’s US branded cards business. Citi’s branded cards earned $2.2 billion in revenue in Q4 2016, posting 15% growth year-over-year. Without Costco, that growth rate dips to 2%, showing the massive impact that the portfolio acquisition continues to have on Citi’s business. Story in Business Insider.
Yahoo Faces SEC Probe Over Data Breaches
U.S. authorities are investigating whether Yahoo Inc.’s two massive data breaches should have been reported sooner to investors, according to people familiar with the matter, in what could prove to be a major test in defining when a company is required to disclose a hack. The Securities and Exchange Commission has opened an investigation, and in December issued requests for documents, as it looks into whether the tech company’s disclosures about the cyberattacks complied with civil securities laws, the people said. The SEC requires companies to disclose cybersecurity risks as soon as they are determined to have an effect on investors. The investigation is likely to center on a 2014 data breach at Yahoo that compromised the data of at least 500 million users, according to the people familiar with the matter. Yahoo disclosed that breach in September 2016, despite having linked the incident to state-sponsored hackers two years earlier. To date, Yahoo hasn’t explained why the company took two years to disclose the 2014 incident publicly or who made the decision not to go public sooner with this information. In mid-December Yahoo also said it had recently discovered an August 2013 data breach that had exposed the private information of more than 1 billion Yahoo users. Story by Aruna Viswanatha and Robert McMillan for The Wall Street Journal.
IRS Hunts Debit Cards For Tax Evasion, As Court Approves John Doe Summons
The IRS has gone after tax evasion in Swiss and other offshore accounts, and has collected a staggering $10 billion. Then, the IRS turned to virtual currencies like Bitcoin, after a court allowed an IRS John Doe summons for bitcoin and other virtual currencies. Now, the IRS is going after some debit card use, too. How does the IRS get on to you, you might wonder? If the IRS knows who you are, it can audit or investigate you. But increasingly, one important technique is the John Doe Summons. In 2008, the lid came off the hushed world of Swiss banking when a judge allowed the IRS to issue a John Doe summons to UBS for information on U.S. taxpayers using Swiss accounts. Now, the IRS has turned to certain debit cards.With a normal summons, the IRS seeks information about a specific taxpayer whose identity it knows. A John Doe summons allows the IRS to get the names of all taxpayers in a certain group. The IRS needs a judge to approve it, but recent IRS success may lead to more. Story by Robert W. Wood for Forbes.
United States Number One in Data Breaches
The United States led the world in data breaches in 2016, according to new research. Last year, nearly half (47.5%) of announced data breaches and 68.2% of breached records came from the United States. America had nearly 2,000 breaches, which was 10 times as many as the second highest country, the United Kingdom, which had 203. From those 2,000 breaches, more than 2.9 billion user records were exposed. That is also 10 times as many as Russia, which was second in breached records. Yahoo’s two massive breaches, which accounted for 500 million and 1 billion records, pushed the United States far into the number one position, as these are two of the largest breaches in history. While these breaches occurred in 2013 and 2014, they were not announced until last year. However, even if these breaches are disregarded, the United States still had five times as many exposed records as Russia. Worldwide, 2016 was a noteworthy year for data breaches. The top four breaches of all time and eight of the top 20 hacks occurred last year. Story by Bill Hardekopf for LowCards.com.
4 Credit Card Trends for 2017 and What They Mean for You
In 2016, high-end credit cards attracted a lot of attention with generous rewards and perks. But this year, issuers are going back to basics – and perhaps charging you more in the process. Here are four credit card industry trends taking shape for 2017. More bread-and-butter rewards. Higher interest rates. A growing subprime market. Smoother transactions. Story by Claire Tsosie for USA Today.
Here’s the Average American’s Credit Card Debt and How to Get Yours Under Control
According to Experian’s latest State of Credit report, the average U.S. consumer holds about two bank-issued credit cards and carries a total balance of $5,551. That’s a lot of money, especially if you’re paying interest of 15% to 20%. The average American’s total credit card balance of $5,551 represents 30% of their total available credit limits. According to a separate study from ValuePenguin (which found a similar average credit card debt of $5,700 per household), only 38.1% of all American households carry any credit card debt at all. This implies that the average household that carries a balance owes a whopping $16,048. Furthermore, there is significant variation among different generations and regions. The Experian report found that Baby Boomers and Gen X-ers carry more than twice the credit card debt of Millennials. However, the younger generations use a greater percentage of their available credit than older Americans. In fact, Gen X or younger Americans use about 36% of their available credit on average – well over the 30% maximum recommended by most experts. Story by Matthew Frankel for USA Today.
Credit Card Lender Measures Potential, Not Risk, of International Students
More than 1 million international students are studying in the United States. Many of them find it helpful to have a smartphone and a credit card. Unlike many cash-based societies, credit cards are widely used in the U.S., especially with the advent of e-commerce. With a mobile application, users with a credit card can buy things and order food or a car ride. Obtaining a credit card, however, is not easy for international students. Traditional U.S. lenders often require an applicant’s Social Security number and a record of their credit history, which most international students don’t have. Kalpesh Kapadia is the co-founder and chief executive officer of a Silicon Valley-based lender called SelfScore. It measures the potential of the student, and not just the risk, through an unconventional way of determining an applicant’s creditworthiness. “Everyone has a smartphone. Everyone has a social media presence, so what we look at is that these people have been through many filters in society,” he said. Kapadia says SelfScore looks at documents such as passports and visas. There is also the academic criteria, such as an applicant’s acceptance to a school, and potential ability to pay. Kapadia says fewer than 1 percent of SelfScore’s 10,000 credit card holders are delinquent on payments. Story by Elizabeth Lee for Voice of America.
Mastercard Built a Mobile Marketplace for Farmers in East Africa
More than two billion people across the world continue to stay unbanked. One of the biggest reasons for that exclusion is accessibility. In developing countries in particular, low-income groups tend to get left out of the fold because they don’t have access to basic banking services. But now, as simple services like mobile banking have proven to help people transition out of poverty in Africa, organizations are starting to focus on the financial inclusion of vulnerable communities. 2Kuze, a mobile payment solution from Mastercard Labs, is one such initiative that is built for farmers in Kenya. 2Kuze, which translates to “let’s grow together” in Swahili, is a digital platform that connects farmers with agents and buyers for cashless transactions. When a buyer enters an online inquiry, the system generates a text message that taps into the farmer community. A farmer can choose to respond with an offer to provide that produce entirely or pitch in with what’s available at the time. An agent, who works with Mastercard Labs, then goes in to verify that offer and to negotiate the price with the farmer. Story by Mona Lalwani for Engadget.
Hong Kong Startup Neat Approves Prepaid Cards Through Facial Recognition
Hong Kong startup Neat recently launched prepaid credit cards that enable users to register instantly through facial recognition technology. Launched in early December, Neat’s prepaid credit cards are designed specifically for students and first-time jobholders with limited or no credit history who can’t get approved for a credit card from traditional financial institutions. After downloading the Neat app, users are asked to enter their biographical details as well as upload a proof of address and their passport photograph, which the app scans to verify authenticity. The app then prompts users to take a “selfie” to verify that the applicant is actually the same individual whose picture appears in the passport. If the images match, the app immediately issues a virtual “prepaid credit card” that the user can start using for online purchases while the actual card is mailed out to the user within a week. Story by Justin Lee for Biometric Update.
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 14.97 percent, slightly higher than last week’s average of 14.96 percent. Six months ago, the average was 14.62 percent. One year ago, the average was 14.89 percent.