LowCards.com Weekly Credit Card Update–November 11, 2016
CFPB Likely to Be Reined in Under Trump, Republican Congress
The Consumer Financial Protection Bureau could have new leadership and curtail its robust rulemaking and enforcement activities under President Donald Trump. Trump may be able to replace CFPB Director Richard Cordray if an October federal appeals court ruling in PHH v. CFPB that the bureau is an executive branch agency stands-that is if congressional Republicans don’t get rid of his job entirely first. Congressional Republicans had already made clear they want to rein in the CFPB’s independence by replacing the CFPB with a board, subject it to the congressional appropriations process, and even rename the agency. Story by Chris Bruce and Gregory Roberts for Bloomberg.
More Americans Turn to Mobile Banking
Significantly more Americans are turning to mobile and online banking, according to a recent study from the Federal Deposit Insurance Corporation. The FDIC National Survey of Unbanked and Underbanked Households found that, from 2013 to 2015, the percentage of Americans using online banking rose from 55% to 60%, and mobile banking use grew at an even faster rate, rising from 23% to 32%. The FDIC concluded that Americans, particularly the underbanked, appreciate the greater control and convenience offered by mobile and online banking. The FDIC found nearly 20% of households were identified as underbanked, which they defined as households that “had an account at an insured institution but also obtained financial services and products outside of the banking system.” These underbanked households were more likely to use their mobile devices as their primary method of managing their accounts, because they saw significant benefits with these products, including reminders and balance alerts that helped them stay on top of their finances. Story by Bill Hardekopf for LowCards.com.
Good News for Visa and Mastercard, As Card Spending Grows
American consumers just can’t get enough of their plastic. U.S. spending on electronic payment cards rose 7.4% last year to $5.8 trillion, according to new data from The Nilson Report. In total, U.S. consumers made 104 billion transactions on their cards in 2015. Credit cards accounted for 53.5% of all card spending, while debit cards were 46.5% of card spending. This, of course, is good news for Visa and Mastercard, the dominant card networks. American Express still carries some heft, as well. Visa-branded cards had 47% of purchase volume in the U.S. in 2015, followed by Mastercard at 21%, and Amex at 12%. Story by Alex Eule for Barron’s.
Yahoo Tells SEC It Knew about Data Breach in 2014
Yahoo fessed up in its latest SEC filing that it knew in 2014 that attackers were on its network and stole information from 500 million accounts. The breach was disclosed in September and Yahoo blamed state-sponsored attackers, a claim that was challenged by some experts who instead said a criminal outfit was behind the attack and may have sold some of the data to an Eastern European government. The SEC filing also contains a confirmation from Yahoo that Verizon’s multibillion-dollar acquisition of Yahoo’s core business could be in jeopardy, and that Verizon could seek to terminate or renegotiate the terms of the sale. Story by Richard Mimoso for Thread Post.
Citibank Launches Citi Pay Mobile Wallet and NFC Payments Service
Citibank has launched a new mobile wallet using Mastercard’s Masterpass digital payment service, allowing up to 100m of its customers to make purchases online and in-app, as well as NFC mobile payments in-store, in 33 countries. Citi Pay is available to all Citi customers for online, in-app payments, while for cardholders with Android devices it will allow them to make in-store purchases by tapping their mobile at any NFC-enabled point-of-sale terminal. Customers will be able to make online and in-app purchases using the same Citibank online user ID and password that they currently use to manage their existing online account with the bank. Story by Christopher Brown for NFC World.
Rakuten Banks on Credit Card Business to Counter Slower Growth
Struggling with declining profit and a surging Amazon.com, internet retailer Rakuten is leaning on its credit cards-the ones it issues to millions of Japanese. Rakuten, which operates an internet mall, said its credit card business posted 45% growth in operating profit for the July-September quarter, helping counteract a decline for the third quarter in a row in the company’s domestic e-commerce business. The company now gets nearly 40% of its revenue from financial services, operating Japan’s biggest internet bank and the third-largest credit company by transaction value. That helps it counter headwinds from slower growth and intensifying competition from Amazon in attracting virtual shoppers. Rakuten’s business model revolves around a point-based membership program that encourages people to use services such as travel booking and food delivery and pay for them with the company’s card. They can use their points on those services and purchases on the internet mall. Story by Alexander Martin and Takashi Mochizuki for The Wall Street Journal.
Holiday Shoppers Warned About Fake Apps and Fraud
Criminals are going after the databases of online merchants and trying to engineer an account takeover. The crooks don’t need to steal your credit card or debit card number. Instead, they use information found elsewhere, maybe via a breach, to gain access to your online account with a given retailer. Once they’re in, the crooks could get access to the credit card you had on store with the online retailer. They might order something online and pick it up in the store. Criminals know that many people re-use passwords, so they can hack into accounts using passwords obtained via other breaches. What are some ways to steer clear of the fraudsters this holiday season? Here are a few tips. Story by Susan Tompor for the Detroit Free Press.
EMV Chip Credit Cards Have Some Surprising Haters: Millennials
It’s been just over a year since the rules around credit card fraud changed, creating an incentive for banks to issue cards with EMV chips and merchants to accept them. Consumers have adapted well. According to a recent survey, 78% of Americans view EMV cards in a positive way. So if Americans approve of EMV, why are we seeing so many complaints? According to the survey, Millennials are the only generation to prefer traditional magstripe cards over EMV. Almost one-third of Millennials (31%) had negative feelings toward EMV chip cards, the survey found, the highest percentage of any age group. There are two major reasons why: longer transaction times and confusion about when to use the technology. Story by Erin El Issa for USA Today.
The Psychological Trick that Makes It Harder to Pay Off Your Credit Cards
Unlike your typical mortgage or car loan, credit cards are a door to open-ended debt. There exist no standard repayment plans, no deadlines to keep you on track. Beyond a token minimum each month, you’re free to mail in as much or as little money as you like. It turns out that the human mind is terrible at dealing with all that flexibility. Only a quarter to a third of credit card users pay off their bills in full every month. Most Americans carry a balance, and as new research shows, a surprising number of them pay close to the minimum each month-even when it’s clear that they could easily settle their debt faster and save a ton of money in interest payments. Too many Americans, it seems, have a broken understanding of what the minimum payment on their credit card means and what purpose it serves. In fact, as the research illustrates, minimum payments are a cunning tool, calibrated to extract as much profit from people as possible. Story by Jeff Guo for The Washington Post.
Exploring the Present and Future of Credit Card Processing
The foundation of the future of credit card processing will be based on two pillars: speed and efficiency. The companies that are staying ahead of the trends in the payments ecosystem have realized that these two factors are paramount for consumers. 25% of organizations stopped accepting cash altogether in 2015. And given that more individuals are managing their finances electronically, it’s natural that more companies will become cashless. To that end, mobile payments will be the wave of the future. Apple Pay, Samsung Pay, Chase Pay, Android Pay, Microsoft Wallet, Walmart Pay, Kohl’s Pay, and more will all become habitual for shoppers, who will reach for their phones instead of their wallets. Story by Andrew Meola for Business Insider.
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 14.65 percent, slightly higher than the 14.60 percent last week. Six months ago, the average was 14.75 percent. One year ago, the average was 14.62 percent.