LowCards Credit Card Update October 28
The two largest credit card networks, Visa and MasterCard, are pushing into a new business: using what they know about people’s credit card purchases for targeting them with ads online. Their plans, if implemented, would represent not only a technological feat–tying people’s Internet lives with shopping activities–but also an erosion of the idea of anonymity on the Web. It’s an effort by the two companies to profit by selling access to the insights they gather about people with every credit card transaction. The technology is still evolving. According to ad executives briefed on some of the ideas, a holy grail would be to show, for instance, a weight-loss ad to a person who just swiped their card at a fast-food chain; then track whether that person bought the advertised products. Currently, Web ads generally are based on a person’s online behavior but not information tied to his or her identity or activities in the brick-and-mortar world.
Story by Emily Steel of the Wall Street Journal
Visa Inc., the world’s biggest payments network, posted a fiscal fourth-quarter profit that exceeded analysts’ estimates as credit card spending climbed faster than debit. Net income for the three months ended September 30 rose 14 percent to $880 million. Spending on Visa credit cards in the U.S. grew faster than debit cards for the first time since at least 2005 as affluent consumers stepped up purchases. New federal caps on fees that banks collect for debit transactions also are prompting lenders to encourage consumers to use credit cards instead. U.S. credit card purchases climbed 10 percent to $228 billion, compared with a 6.4 percent increase in the same period last year, the company said. Spending on debit cards in the U.S. advanced 8.1 percent to $288 billion, slower than the 20 percent growth Visa reported for last year’s fiscal fourth quarter.
Story by Dakin Campbell for Bloomberg Businessweek
Banks have spent much of the past year howling about revenue lost after financial reforms limited consumer fees, especially the billions they reaped from charges for covering overdrafts on debit cards. Those programs, though, remain highly profitable. As banks pushed a shift from paper checks to debit cards over the past decade, they began enrolling customers automatically in overdraft protection plans, with charges of as much as $35 for each overdrawn transaction. Banks say that lets the 185 million Americans with debit cards make emergency purchases even if their account is short. Consumers, though, soon discovered that a slice of pizza could cost almost $40 after overdraft fees. Last year, the Federal Reserve barred banks from offering overdraft protection on debit card transactions without prior consent from consumers. Many banks that offer the services have launched aggressive marketing campaigns to get customers to sign up. The banks sent letters and e-mails explaining the changes, at times with alarmist warnings that if they didn’t sign up their card might be rejected when they most need it. Some banks called customers who’d had transactions denied to persuade them to opt in.
Story by Karen Weise of Bloomberg Businessweek
Wait, we thought Congress rode to our rescue in 2009 and punched out those villainous, mustache-twirling bankers with the Card Act. The legislation freed us from the bankers’ conditions, restrictions and gotcha fees, right? Not by a long shot. Outlaw one bank fee, and they’ll just invent a new one–most recently, a monthly fee on debit-card use. If you want to protect yourself from bankers and their gangs of double-talking lawyers, don’t call Congress. Take matters into your own browser.
Story by Mike Hogan for Barron’s
Bank of China Ltd. will issue American Express credit cards under an agreement the financial companies announced Wednesday. Bank of China will issue the American Express-branded cards to its private clients. The cards will come with perks including “fast-track” service through immigration and security lines at some airports, discounts on travel and other features. Transaction processors Visa Inc. and MasterCard Inc. have also been trying to tap China’s fast-growing payments industry through agreements with China UnionPay, the only transaction-processing network in China.
by Andrew R. Johnson of the Wall Street Journal