The consequences of a bank card crisis
Visa and Mastercard said they’d agreed to scale back swipe fees, the prices related to using a bank card, for about five years. Lawyers for traders who filed the case estimate it could save about $30 billion in fees. Perhaps more importantly, merchants can increase their prices depending on the cardboard type. For example, buying groceries with a higher-fee card, typically a premium card just like the Chase Sapphire Reserve, may very well be costlier than paying with a lower-fee card. Retailers may have the liberty to charge more for using rewards cards, but do they need to bother customers? [The New York Times]
There could also be changes to your bank card rewards because of the brand new swipe fee offer
Credit card points may very well be entering a brand new era
One of America’s great pastimes, earning points with bank cards, could soon be changing. A big portion of interchange fee revenue is spent by banks encouraging you to make use of their fancy cards. And one of the best option to do that is thru points and rewards. Cards with higher rewards and cashback options often have higher exchange fees. Merchants must accept all kinds of Visa and Mastercard bank cards in accordance with the “Honor All Cards” rule. But now they might charge consumers more depending on the kind of card they use. Banks are unlikely to rely entirely on rewards. The card programs were too essential for banks to stop retaining these customers. [Business Insider]
Walmart can end its bank card partnership with Capital One early, a US judge rules
A federal judge ruled Tuesday that Walmart can end its bank card partnership with Capital One early since the bank failed to supply required customer support. The world’s largest retailer had accused Capital One of posting many transactions to cardholders’ accounts too slowly and never promptly replacing many lost cards. [Reuters]
Capital One/Discover: What’s in your wallet?
If two of the country’s largest bank card banks merge, will it create a behemoth that limits consumer selection and drives up card fees? Does it profit the general public or simply the brand new bank? These are a number of the concerns of critics of Capital One’s proposed $35.3 billion acquisition of Discover Bank, a deal that has continued to face significant headwinds because it was announced last month. The latest group to challenge the proposed merger is a coalition of 30 community, consumer, civil rights and public interest groups. The group said the merger between the bank and the payment processing network “introduces unique anti-competitive considerations and potentially negative impacts on depositors and customers,” who needs to be given the chance to lift their concerns. [Kiplinger]
15 million Americans, including those making greater than $100,000, are buying groceries using buy now, pay later apps as inflation rages
Soaring food inflation is forcing more Americans to make use of buy now, pay later apps when grocery shopping, including shoppers making six figures. A PYMNTS Intelligence evaluation found that 15 million people, or 6.5% of the U.S. population, reported using “buy now, pay later” or BPNL apps to pay for groceries last yr. About 5.4% of those that used the apps were low-income Americans, in line with the study. The rest were those whose annual income was not less than $100,000. [New York Post]
Starbucks mobile orders exceed 30% of all U.S. store transactions
Starbucks continues to see a gentle increase within the number of consumers using its mobile app to buy coffee and other items. The Seattle company said that as of Dec. 31, 31% of all transactions at stores operated by U.S. corporations were accomplished through the app. That’s a brand new record and up from 27% in the identical quarter last yr and 25% two years ago. Starbucks introduced its mobile ordering feature a decade ago. The company is now one in every of the leading mobile payment providers within the USA [Geek Wire]
CFPB examines bank card rewards, buy now and pay later corporations
The top U.S. consumer financial protection agency will scrutinize bank card rewards programs after a surge in customer complaints. “We will investigate the credit card rewards market as the number of consumer complaints increases,” said Rohit Chopra, director of the CFPB. Companies offering “buy now, pay later” services could also face tougher rules, Chopra said, underscoring a longstanding stance. [Reuters]
New York City is starting to present prepaid debit cards to illegal immigrants as a part of a $53 million pilot program
Officials in New York City have begun distributing prepaid debit cards to migrant families within the Big Apple. The first batch of debit cards supposedly utilized by illegal immigrants to purchase groceries and baby supplies were distributed to a handful of migrant families in town on Monday. The move is an element of a reported $53 million pilot program to distribute prepaid bank cards to migrant families staying in hotels despite public outcry. [Fox News]
As their popularity increases, more banks are considering gift cards as a loyalty profit
Consumer interest in gift cards stays high, with 56% planning to buy them for essential life events and 38% preferring them as holiday gifts over physical items. Given consumer interest, several financial institutions and fintechs are partnering with technology providers to supply gift cards and drive consumer loyalty and engagement. While gift cards are nothing latest, how and where customers purchase these cards is changing. City dwellers are twice as prone to purchase a present card through a P2P app like Venmo. Last yr, the corporate announced a partnership with gift card maker Hallmark that enables customers to present the gift of cash in a physical Hallmark card. Venmo reports that 78% of its customers repeatedly use the P2P app to send money as gifts to their family and friends. [Tear Sheet]
Klarna targets Visa and Mastercard with Open Banking Push
As a part of the fintech giant’s efforts to scale back its reliance on Visa and Mastercard, Klarna will begin allowing users within the UK to make payments directly from their bank accounts. The move will initially help Klarna reduce costs as bank payments are cheaper than accepting Visa and Mastercard products. In the long term, nonetheless, the product will help Klarna create a stronger alternative to the payment giants’ networks. [Bloomberg]
Robinhood is making a giant push into bank cards with 3% money back rewards and the 10-karat gold Visa card
Robinhood announced the launch of its first bank card that may offer a variety of premium rewards, including a brand new travel portal that gives 5% money back on purchases and three% money back on every part else. These rewards are amongst probably the most generous within the industry and show that the corporate intends to change into a significant player within the bank card sector as a part of a broader push to supply a comprehensive range of monetary services, including retirement accounts. [Fortune]
