This Week In Credit Card News: Costco’s Card Switch Has Paid Off; Beware Of Healthcare Data Breaches

A Costco Wholesale warehouse location in Woodbridge, Virginia, January 5, 2016. AFP PHOTO / SAUL LOEB / AFP / SAUL LOEB (Photo credit should read SAUL LOEB/AFP/Getty Images)

A Costco Wholesale warehouse location in Woodbridge, Virginia, January 5, 2016. (SAUL LOEB/AFP/Getty Images)

Costco’s Big Credit Card Bet Has Paid Off

Costco made a move in June 2016 that could have caused a massive disruption in its business. The company completed a plan to drop American Express and replace it with the Costco Anywhere Visa Card from Citi. It was a big risk by the company because it wasn’t simply changing which company provided its rewards card. Instead, Costco had dropped American Express altogether. The move was more dangerous for the company because some customers might not want to make the rewards cards switch. In addition, it was also possible that some non-rewards American Express customers—likely valuable business customers—would leave the warehouse chain because they might not want to change credit cards. Costco got a better deal for itself and for its customers. As it turned out, Costco made the switch with minimal damage to its reputation, kept its customer base, has added one million new credit card holders, and increased the fees it takes in from the card provider. The company also delivered a 1% increase in U.S. comparable sales in Q1 which it followed with a 3% gain in December, 2016, and a 6% increase in January 2017.  [The Motley Fool]

One in Four Americans Have Been Victims of Healthcare Data Breach

One in four Americans (26%) have had their medical information stolen, and these breaches can be quite costly. Half the victims had to pay an average of $2,500 in out-of-pocket costs per incident. A new study found that hospitals accounted for 36% of these breaches. Urgent care clinics (22%), pharmacies (22%), physician’s offices (21%) and health insurers (21%) rounded out the list. Unlike credit card identity theft, where a card issuer has a legal responsibility to cover losses above $50, medical identity theft victims do not have an automatic right to recover losses. []

Americans Losing Battle Between Savings, Debt

Nearly one in four (24%) consumers in a recent survey have more debt on their credit cards than emergency savings. Millennials are the most likely demographic to have more credit card debt than emergency savings. 17% of overall respondents said they have no credit card debt and no savings. One alarming finding is that 28% of respondents, ages 72 and older, had no emergency savings, and that is the highest percentage of any age group. This is a testament to how many seniors are surviving on a fixed income such as Social Security and a pension with little wiggle room.  [Fox Business]

Uber Would Have to Allow Drivers to Collect Tips from Credit Cards under a New California Bill

Uber drivers will be allowed to receive tips from passengers through the company’s credit-card-based app through new California state legislation introduced. A new bill would force companies, such as Uber, that accept payments with credit cards to allow users of the service to tip workers with credit cards as well. Currently, Uber only allows its drivers to receive tips in cash. The legislation would also apply to nail salons, spas and all other businesses accepting credit card payments. The measure was the first step in what could ultimately be a broader bill that would allow workers in the so-called gig economy to organize. [The Los Angeles Times]

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This Week In Credit Card News: Yet Another Yahoo Breach; Do You Hide Bank Accounts From Your Spouse?

Why 12 Million of You Hide Credit Cards From Your Spouse

If you’re willing to conceal a credit card and make big purchases your spouse doesn’t know about, what other secrets are you willing to keep? If you want a great way to erode trust between you and your spouse, financial infidelity is a great way to do so. According to a new survey, 12 million Americans have concealed a bank or credit card account from their live-in spouse, partner or significant other. These aren’t just youthful indiscretions, either: older Baby Boomers (11%), those aged 63 to 71, are nearly four times as likely as Millennials to have had a secret account (3%). [The Street]


Yahoo Notifies Users of ‘Forged Cookie’ Breach

Some Yahoo account holders are being notified that an intruder may have accessed their account without the need of a password. The incidents stem from the data theft that Yahoo disclosed on Sept. 22, 2016, in which at least 500 million Yahoo accounts were stolen from the company in 2014—an action that the online media company believed was performed by a state-sponsored actor. [USA Today]

Banks Look to Cellphones to Replace ATM Cards

Wallets can be lost, stolen or forgotten, but most people today wouldn’t be caught dead without their phones. Banks understand, and are grabbing on to that trend. Customers who don’t want to fumble around in their wallet for their ATM card will soon be able to unlock cash dispensers’ coffers by using their phone. JPMorgan Chase, which has more ATMs in the United States—18,000—than any other bank, has activated this technology on a few hundred machines in four test cities. Six thousand more are already upgraded and ready to go. Bank of America and Wells Fargo plan to introduce cardless options to all their machines by the end of the year. [The New York Times]

MasterCard Canada Sets New Tone in Fee Battle

A small-business group has won lower merchant fees for its members from MasterCard Canada, a move that could put more pressure on credit card firms to reduce their rates and prompt other associations to seek preferential pricing. The Canadian Federation of Independent Business, which represents more than 100,000 small firms, is set to unveil a deal with MasterCard that will reduce most of CFIB members’ transaction fees to levels that are now offered to just a small number of the country’s largest merchants, those with annual MasterCard sales of $3-billion or more. [The Globe and Mail]

CFPB Looking to Alternative Data to Help Unbanked

The Consumer Financial Protection Bureau is seeking feedback on the benefits and risks of using alternative data sources, such as rent or utility payments, that would allow lenders to build a credit history for unbanked consumers. Alternative data could be used to establish a track record and payment history for unbanked and underbanked consumers that tend to skew low-income and minority. [National Mortgage News]

Starz is Democratizing Premium-TV Subscriptions for People Without Credit Cards

Premium-cable network Starz has a strategy for winning the streaming-video war, and it is not outspending larger rivals HBO, Netflix, and Amazon on big-budget productions. The network instead plans to offer its premium-TV services to more lower- and middle-income households, including the nearly one-third of US adults who don’t have credit cards. To reach these “underbanked” consumers, Starz is going to issue pre-paid subscription cards that will allow people to pay for the premium-streaming service without using credit cards. [Quartz]

The Curious Case of Prepaid Credit Cards in Iran

International credit cards, namely Visa and MasterCard, were slated to enter Iran, but they didn’t. The imposition of nuclear sanctions against Iran had made the official sales of these cards illegal. The year 2013 was the last year a couple of banks issued international prepaid credit cards in Iran officially. Nevertheless, some companies continue to issue Visa and MasterCard and sell them multiple times their real value. [Financial Tribune]

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This Week In Credit Card News: 58% Abandon Mobile Purchases Before Checkout; Credit Card Sunglasses?

58% Abandon Mobile Transactions Before Checkout

It’s not surprising that consumers around the world are using their smartphones to make purchases. However, while an overwhelming number of people have made a mobile purchase, the majority have not finalized a purchase they started. More than three fourths (78%) of people made a purchase by mobile in the previous six months, but more than half (58%) abandoned a transaction before checkout. [Media Post]


Visa’s Newest Invention Turns Sunglasses into Credit Cards

What if your credit card took the shape of sunglasses that both protected your eyes and stayed on your face so you could leave that wallet at home? That’s the idea behind Visa WaveShades, their new sunglasses loaded with credit card technology. Visa premiered the new gear at Australia’s Laneway Festival, where the glasses were met with plenty of confusion-turned-excitement. The WaveShades are embedded with payWave technology, so they operate the same as your phone might when confronted with a contactless payment system. The whole concept is similar to the wristband payment systems of Tomorrowland, and certainly makes for a more secure method of carrying money around in a high-theft environment. [Your EDM]

JPMorgan Accused of Nickel-and-Diming Jurors on Debit Cards

For some people, jury duty is a dreaded American civic obligation. Now, JPMorgan Chase is adding another unwelcome element: banking fees. In a handful of jurisdictions, the biggest U.S. bank by assets has taken over administration of the juror-compensation system, issuing debit cards instead of the age-old system of paper checks. The cards also come loaded with fees–for balance inquiries, for inactivity, for using non-Chase ATMs, for charges with insufficient funds and for cash or check issuance. The funds become impossible to withdraw from an ATM once the balance falls below $20, and in at least one jurisdiction–Washington, D.C.–there are no Chase branches or ATMs within 90 miles, ensuring the funds will eventually be frittered away to the bank. [Bloomberg]

Arby’s Probes Possible Data Breach of Credit Cards

Malware on cash registers at Arby’s fast food restaurants may have resulted in the breach of more than 355,000 debit and credit cards. The incident may have affected cards used at hundreds of the chain’s restaurants. Only Arby’s restaurants owned by the Atlanta, Ga.-based company were affected, not its franchises. Arby’s Restaurant Group, Inc. said it had recently launched an investigation of its payment card systems after learning of a possible data breach. It also eradicated the malware from systems at restaurants that were impacted. [USA Today]

Discover’s Daring Bid For Credit Card Revolvers

The credit card industry has traditionally coveted customers known as “transactors”–high-spending individuals who tend to pay off their balances every month. Lately, Discover Financial Services has become an outlier in the card industry for its pursuit of the opposite kind of cardholder–so-called “revolvers,” who tend to rack up more debt, and be more inclined to carry a balance every month. The major risk of this approach is its susceptibility to account delinquencies. Yet Discover’s strategy has been a success. The company had a strong Q4 performance, driven in large part by growth of interest revenue, from those revolvers carrying debt, and paying a price for that every month. It also helps that those debt-laden customers are less fickle than the transactors. They’re less likely than the higher rollers to simply churn and burn through their cards, signing up for bonuses, paying everything off once the minimum time limits are met, and then shelving the old cards and signing up for new ones. [Forbes]

What Consumers Really Think of Chip Credit Cards

The transition to chip credit cards took place in October 2015, so consumers have had over a year to use this relatively new technology. What do they truly think of these cards? An overwhelming percentage of consumers are comfortable with these new chip-embedded cards. In addition, while the chip cards require a longer transaction time than magnetic strip cards, a large majority of consumers felt this wait was tolerable. 80% of consumers who have tried using their chip credit cards are very or somewhat comfortable using these cards. Only 8% felt chip cards were too slow to use. Of those that expressed any hesitation about chip cards, the two biggest concerns were the speed of the transaction (55% of concerns) and the security of these cards (39%). []

Debit Card For Kids Can Be Managed By Parents Via Phone

Money doesn’t grow on trees, it comes from parent’s smartphones! Financial startup Greenlight is planning to give kids their own cards. Parents have complete control over its use. As the name suggests, each transaction with the card requires a “greenlight” from the parents. What’s more, every time the card is used, parents get an instant notification on their phone. The Greenlight card is actually a debit card and does not require a credit check to obtain. Unlike prepaid cards or other debit cards targeted at young people, parents can pre-approve which stores or locations where the card can be used. Parents can also decide how much the kids can spend at these places. [PSFK]

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This Week In Credit Card News: Card Thieves Move To Online Transactions; New Threats To ATM Security

Credit Card Thieves Move Online As Chips Thwart In-Store Fraud

The adoption of credit card chip technology by retailers in the United States is having an unintended consequence: Criminals are moving from brick-and-mortar stores to the internet. The use of stolen card data to pay for merchandise on websites, in mobile apps and by dialing call centers surged 40% last year. That’s forcing merchants to spend billions on online fraud protection. Issued by banks, cards containing the so-called EMV technology are much harder to counterfeit, which cuts down on in-person fraud at stores. [Bloomberg]


ATM “Shimmers” Threaten Chip Credit Card Security

Card skimmers are devices used by criminals to steal information from your debit or credit card when you slide it into the sleeve of an ATM or gas pump. These devices are relatively bulky and difficult to conceal, making them somewhat impractical for identity thieves. Unfortunately, a new threat has reached the market, a thin, virtually undetectable reader designed to target chip-based credit cards. Known as “shimmers,” these devices sit between the chip reader in an ATM or register and the chip on the card.  []

RushCard Customers Will Get $10 Million In Restitution

The tens of thousands of RushCard customers who were affected by a 2015 service disruption are getting some financial restitution for their troubles. The CFPB ordered Mastercard and UniRush, which manages the RushCard, to pay around $10 million to consumers who weren’t able to access their funds or were financially hurt from the disruption. The RushCard, which was co-founded by hip-hop pioneer and entrepreneur Russell Simmons, is a prepaid card, which means it’s not linked to a bank account. In 2014, Mastercard became the new payment processor for the RushCard. The conversion to the new system in 2015 did not go smoothly, due to what the CFPB called “a rash of preventable failures” by the companies.  [CNN]

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This Week In Credit Card News: How 2017 Credit Card Trends Affect You; Apple Pay Grew 50% Last Year

4 Credit Card Trends for 2017 and What They Mean for You

In 2016, high-end credit cards attracted a lot of attention with generous rewards and perks. But this year, issuers are going back to basics – and perhaps charging you more in the process. Here are four credit card industry trends taking shape for 2017. More bread-and-butter rewards. Higher interest rates. A growing subprime market. Smoother transactions. [USA Today]




Apple Pay Records 50% Growth in 2016, as Mobile Apps and Websites Prove Most Popular

The number of monthly US Apple Pay credit card transactions conducted in-app, online and at the in-store point of sale grew by 50% between December 2015 and December 2016, new research showed, with mobile apps and websites attracting the highest proportion of transactions. US convenience store chain Duane Reade has the highest proportion of Apple Pay credit card transactions out of all supporting in-store locations with 1.80%, followed by supermarket chain Whole Foods with 1.70%. All other in-store retailers have Apple Pay transaction volumes of less than 1%. [NFC World]

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