LowCards.com Weekly Credit Card Update–October 30, 2015
Walmart Exec Predicts New Credit Card Chip Technology Will Cause Black Friday ‘Anarchy’
A Walmart executive is predicting “anarchy” this holiday shopping season due to new rules in place requiring retailers to accept chip-embedded credit cards from consumers. The exec feels the timing of the rules, which went into effect Oct. 1, will cause confusion and longer lines at retailers on Black Friday and throughout the holidays. Story by James Geddes for Tech Times.
MasterCard Wants to Turn Every Gadget into a Credit Card
MasterCard wants to let every new gadget turn into a credit card. It’s launching a new program that’ll allow tech companies to make gadgets like smart rings, car keys, and fitness trackers that can also be used to make credit card payments in stores, just like most new smartphones can with programs like Apple Pay and Android Pay. MasterCard is starting out with a few partners, who have already put together prototype units. GM has made a key fob with MasterCard’s wireless payments tech built in; Ringly has done the same with a version of its smart ring; and Nymi has created a smart wristband. The goal is to make paying–and, of course, paying with your credit card–as easy as possible. Rather than needing to have a specific device on you and at the ready, MasterCard wants you to simply swipe the keys that are already in your hand or the ring that’s already on your finger. In doing so, it’s starting to get ahead of the boom in connected gadgets. MasterCard is imagining a world in which its tech even allows connected clothing to make payments. Story by Jacob Kastrenakes for The Verge.
3 of 4 Consumers Have Changed Online Behavior Due to Cybercrime
Nearly 3 of 4 adults (74%) in the United States say they have changed their online behaviors due to the threat of cybercrime, according to a recent survey. The most common changes are not conducting transactions on a shared computer (46% of respondents) and changing passwords more often, not giving out personal information and not using public Wi-Fi (each at 35%). Not only have behaviors changed, perception of security is also different due to the increase in data breaches, which were up 23% in 2014. 42% of respondents feel less secure than they did five years ago, and 44% reported having experienced a security breach first-hand. Story by Bill Hardekopf for LowCards.com.
Are Americans Losing Their Fondness for Airline/Hotel Credit Cards?
A recent poll bears out something I already believed to be true, and am happy to see: Consumers are finally losing their enthusiasm for airline and other affinity credit cards. In fact, half the respondents said they wouldn’t care if their card stopped offering loyalty rewards altogether. Affinity cards, for the uninitiated, are credit cards offered by a bank and co-branded with another company, such as an airline or hotel, that often allow cardholders to collect miles or points for every dollar spent. Critics say the cards prod consumers to spend ever more money so they can collect points toward perks such as free air travel, reduced hotel rates or preferential treatment at travel destinations. Story by Christopher Elliott for the Seattle Times.
Credit Card Interest Soars Over 400% in Brazil
Brazilian banks have taken advantage of the country’s economic crisis to push the median interest rate on credit-cards to 414.3%, the central bank there reported. Interest on personal loans soared in September to a median annual rate of 62.3%, a 13.1% increase over the past 12 months. The central bank’s benchmark interest rate has climbed by only three percentage points during the same period. On credit cards, the most profitable business for banks, interest rates increased 10.8% in September, for a 102.3% rise over the past 12 months. A study by the consumers group Proteste found that credit card interest rates in most Latin American countries range between 25% and 40%. Story in The Rakyat Post.
Colleges Banned from Pushing Students into High-Cost Debit Cards
The U.S. Education Department announced rules that will reform college-sponsored debit cards and keep students from being charged fees on their federal student aid disbursements. Every year nearly $25 billion in federal grants and loans are given to students at colleges that have debit or prepaid card agreements with banks. Those schools account for about 40% of all college students. But the card agreements sometimes involve troubling practices that cause students to lose part of their aid to high bank fees. Story by Kaitlin Mulhere for Time.
RushCard Vows to Compensate Prepaid Debit Card Users For Losses
The issuer of prepaid RushCard debit cards said Thursday that it would compensate thousands of customers for losses caused by a technical glitch left many cardholders unable to pay bills, get cash or make purchases for weeks. Consumer advocates say the ordeal highlights the need for greater regulation of prepaid debit cards, which are mainly used by people who don’t have bank accounts and lack many of the protections of credit and debit cards. The compensation offer from RushCard, which is backed by hip hop mogul Russell Simmons, came nearly three weeks after the problem surfaced. Story by Martha C. White for NBC News.
JP Morgan to Launch Chase Pay to Compete with Apple Pay
In an effort to compete with other digital wallets such as Apple Pay, PayPal and Android Pay, JP Morgan Chase will introduce Chase Pay in the coming year. The company plans to make it easier for its users to make purchases in stores and online. Chase will become part of the Merchant Customer Exchange (MCX) which includes major retailers like Walmart, Target and Best Buy. These retailers will promote Chase Pay to a wider audience by installing a Chase Pay logo on their websites and mobile apps which may encourage users to pay using this product. Chase currently has over 94 million prepaid, debit and credit card customers, so the audience for this platform is vast. Story by John Oldshue for LowCards.com.
USAA Switching Credit, Debit Cards to Visa From Longtime Partner MasterCard
USAA, one of the nation’s largest issuers of debit cards and credit cards, is switching its portfolio to Visa, marking a blow for MasterCard, which processed USAA transactions on its network for roughly 30 years. The move is the latest in a continuing scramble of large portfolios hotly sought-after by payment networks Visa, MasterCard and American Express. It is relatively rare, however, for a card issuer, such as USAA, to switch network affiliations after such a long relationship. The shift underscores the leverage that card issuers can hold over payment networks as they negotiate long-term deals. Those dynamics in recent years also have intensified with retailers exercising power over card issuers and the networks amid rising competition for specialized cards loaded with rewards and perks for customers. Story by Robin Sidel for The Wall Street Journal.
How Mobile Payments Will Grow in 2016
This week has seen no shortage of mobile payments announcements, from a partnership between AmEx and Apple Pay to the new Chase Pay app. All these updates highlight some significant growing pains in the mobile payments market. Namely, despite there being no shortage of options available across smartphone platforms, usage is still rather low. According to a recent Accenture survey, while 52% of North Americans are “extremely aware” of mobile payments, only 18% use them on a regular basis. Unsurprisingly, Millennials and higher-income households lead the pack, with 23% and 38% using contactless payments at least once a week, respectively. These stats may not seem downright disappointing–mobile payment tech is still in its early days, after all. But with eMarketer forecasting 210% growth in the total value of mobile payment transactions in 2016–up to $27.05 billion from $8.71 billion-it’s fair to wonder how companies will close the gap between awareness and adoption. Story by Sarah Silbert for Fortune.
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 14.58 percent, slightly higher than last week’s average of 14.56 percent. Six months ago, the average was 14.46 percent. One year ago, the average was 14.52 percent.