LowCards.com Weekly Credit Card Update–June 9, 2017
Bank and Credit Card Fees Cost College Kids $795 Million
U.S. college students shell out more than $795 million a year on bank and credit card fees, according to a new report. That’s money that could be better spent on tuition and books. About 85 percent of undergrads have a checking account, yet that doesn’t mean they are banking wisely. The average college student overdrafts more than twice a year, and coughs up $35 in fees each time. With more than 11 million full-time undergrads as of 2016, that’s potentially more than $722 million wasted annually in overdraft fees alone. In addition, about one-third of college students have also paid a credit card bill late. With late-payment fees on student cards similarly averaging $35 a pop, that’s another $73 million out the window. Story by Jessica Dickler for CNBC.
Why Our Credit Cards Keep Getting Hacked
Proportionally, attacks on point-of-sale systems (as modern cash register systems are called) are down, according to the 2017 Data Breach Investigations Report by Verizon. This year they’ve made up just 6.7% of overall breaches tracked by the company, down from a high of 45.4% in 2011. Even so, there are still lots of these thefts, in which criminals insert malicious software into a company’s point-of-sale (POS) system. The malware surreptitiously records credit and debit card information when customers swipe them through payment terminals. It later sends the card information to the thieves, who sell it on the Internet underground, known as the dark web. These breaches continue to cause retailers and their customers headaches. In 2016, each stolen record cost retailers $172 to deal with, according to a study commissioned by IBM. One problem is that many retail companies are slow to install software patches, even for known security problems, because they fear the patches might disable their POS software or terminals, causing them to miss sales. Story by Elizabeth Weise for USA Today.
Apple Taking on Venmo with Peer-to-Peer Payments
Apple is taking on Venmo and Square Cash with peer-to-peer payments. Apple said Apple Pay is coming to Messages in iOS 11. Soon, you’ll be able to send fellow Apple users money through an app that’s integrated into iMessage, the default messaging app on Apple’s mobile devices. People already use Apple Pay for transactions on the App Store and at retail stores that accept the mobile payment feature. Messages already supports some third-party apps, which is where Apple Pay will be located. You can send money from the debit or credit card stored in Apple Wallet, and it will be deposited into the recipient’s Apple Pay Cash account, which is a new digital debit card. Like with Venmo, you can transfer the money to your bank, or just store it in your Apple Pay Cash account for future Apple Pay purchases. Story by Selena Larson for CNN.
Connected Devices May Be the Payment Platforms of the Future
A new survey found over 80% of consumers are interested in using connected devices to make payments, and 75% already own at least one connected device. A “connected device” is any smart device that connects with other devices through Bluetooth, Wi-Fi and Near Field Communications. Visa’s study showed the average American owns 4.4 connected devices: 47% own gaming consoles, 41% use activity trackers, 15% have smartwatches, 14% use voice-controlled assistance (Amazon Echo), and the remainder use connected thermostats and virtual reality headsets. Even though Americans are rapidly adopting connected devices, safety remains a top priority for financial transactions. 76% of respondents said data privacy was a concern, and 71% were worried about data security. Story by Bill Hardekopf for LowCards.com.
Mobile Payments Gaining Traction
The latest Expectations & Experiences consumer trends survey finds consumers are paying more bills from mobile devices and making more person-to-person payments while starting to venture into digital wallets. The percentage of consumers using mobile bill pay rose significantly from late 2015 to late 2016, growing from 22 percent to 28 percent. Among mobile banking users, 41 percent used the service to pay bills in the past 30 days. Bill payment was a notable factor in mobile banking use, with 53 percent of mobile banking users citing the ability to pay bills anywhere and anytime, 46 percent citing the ability to quickly pay bills at the last minute, and 31 percent citing the ability to receive mobile alerts when bills are due as reasons they use mobile banking. The share of consumers using person-to-person (P2P) payments via a financial organization in the past 30 days, a timeframe considered to designate “active” use, increased by more than one-third from 2015 to 2016, growing from 14 percent to 19 percent. Over the past year, sharing household expenses was the most common use of the service (9 percent), followed by repaying a loan or debt to a friend or family member (7 percent) and rent (6 percent). Story in FinExtra.
Why Companies Need a Two-Step Plan to Secure Credit Card Transactions
There are two key steps organizations can take to protect payment data: Encrypt the credit card data with an external PTS (PIN transaction Security) and SRED (secure reading and exchange of data) certified payment device, and then enable tokenization. Through encryption, you ensure that no “clear text” of credit card information is transmitted when you process sales. Customers swipe their credit cards, insert their EMV chip, tap their phone for Apple Pay, etc. at a point of sale (POS) device and the personal data — including credit card account number, three-digit Card Verification Code (CVC) and any other sensitive detail — is encrypted before it enters the merchant environment. Then, via tokenization, the encrypted credit card information is replaced with a “token,” a jumbled string of alphanumeric code that is useless to hackers accessing it. To them, it’s just a sequence of numbers and letters. They can’t make sense of it, much less use it to connect to the actual credit card data because the merchant environment that they’ve compromised does not have access to the clear cardholder data. Meanwhile, companies can store a representation of customer card information within their systems to maintain routine operations (i.e. processing returns to credit cards) with significantly lower risk. With this two-step process, organizations are protecting data where it is most vulnerable: encrypting it in transit — from POS terminal to payment processor and back — and tokenizing the data at rest — when it’s in storage on company networks. Story by Matt Donnelly for Beta News.
How a Credit Union Raised the Roof on Credit Card Rewards
A leader is emerging in the world of credit card rewards, and it’s not one you might expect. After revamping its credit card portfolio, Chicago-based Alliant Credit Union now has two cards that outperform even the most generous rewards cards from many major issuers. One offers 2.5% in ongoing cash back, with a $59 annual fee, waived the first year. The other offers 2 points per dollar spent—an effective 2% rewards rate—and a $0 annual fee. These reward rates would be remarkable coming from a major issuer. But for a credit union, they’re even more noteworthy. It’s unusual for these not-for-profit financial institutions to focus on credit card rewards. Story by Claire Tsosie for Nerd Wallet.
Citigroup Expands Asia Digital in Bid to Reach Affluent Clients
Citigroup Inc. is expanding its digital-banking channels in Asia as the bank seeks to boost its base of affluent customers in the region by at least 10 percent this year. The firm is accelerating the deployment of technologies that allow customers to get advice from wealth managers and make transactions through its Internet and mobile platforms. The retail division currently has about 400,000 affluent clients in Asia, with assets ranging from $100,000 to $10 million. Story by Alfred Liu for Bloomberg.
Greenlight Raises $7.5 Million So Parents Can Provide a Smart Debit Card to Their Kids
A company called Greenlight is offering a smart debit card that can be given to their kids, instantly reloaded with funds from a mobile app, and place restrictions around merchants their children can make purchases. After less than six months in market, the company has already signed up 10,000 paying customers and has attracted $7.5 million in funding from investors that include Relay Ventures, Social Capital, New Enterprise Associates and TTV Capital. Greenlight plans to use that funding to expand its team and invest in attracting more customers with its smart debit card. Story by Ryan Lawler for Tech Crunch.
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 15.26 percent, identical to last week. Six months ago, the average was 14.75 percent. One year ago, the average was 14.71 percent.