This Week In Credit Card News: Subprime Card Market Heats Up; Could We See Mobile Banking Fees?

Silicon Valley Lender Raises Nearly $50 Million for Subprime Credit Card Push

LendUp, the startup online lender that has attempted to reinvent the payday loan, is plotting to take on a more mainstream financial product: the credit card. By raising $47.5 million in an equity deal, it plans to roll out a credit card for subprime borrowers and compete with mass-market banks such as Capital One. Last year, LendUp started a limited release of a credit card aimed at similar borrowers, called the L Card. The new effort will expand that brand. Unlike rivals LendingClub and other established startups that aim to give loans to middle-to-upper-class households, LendUp has targeted less-creditworthy consumers who have more difficulty accessing bank loans. [The Wall Street Journal]

The Profitable Business of Lending to Subprime Borrowers

While fees are paid by credit card holders across the board, interest is charged only to those who carry a balance, which often are cardholders with poor credit, according to a report by the Consumer Financial Protection Bureau. The interest payments all cardholders make account for 80% of the total revenue card issuers receive from consumers. But while those considered prime borrowers generally are paying down debt, riskier consumers have been increasing their card balances: to $5,063, on average, from $4,891 one year ago, according to a separate study. As a result, card issuers continue to increase the availability of credit, particularly to millennials and other consumers with lower credit scores. About 10 million new consumers entered the credit card marketplace in the last year alone, the majority of which were subprime borrowers, according to TransUnion. [CNBC]

Mobile Banking Apps Are Worth More Than You Think

How angry would you be if your bank charged you to use its mobile app? A significant minority would be willing to pay up, according to a new survey of nearly 4,000 U.S. bank app users. 21% of people said they’d pay as much as $3 a month for the service, while up to 40% of people said they’d be willing to pay $1 a month. Banks could generate as much as $500 million more in annual revenue. [The Wall Street Journal]

Costco’s Credit Card Nightmare Just Got Even Worse

Costco’s marriage to Visa has been rocky pretty much from the start, and last weekend shoppers faced a new problem. On Friday evening, a number of Costco members received emails from Citi, the issuer of the new Costco Anywhere Visa Card, alerting them that their credit card accounts had been closed. Some members reported that they received emails addressed to other people that contained the last four digits of other users’ account numbers, raising concerns that their accounts had been hacked. [Business Insider]

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This Week In Credit Card News: Major Hotel Chains Hacked; Do Card Companies Prey On Millennials?

Major Hotel Chains Hacked, Credit Card Details Stolen

If you stayed at a major hotel chain in recent months, you might want to check your credit card statement. HEI Hotels & Resorts, which operates a slew of popular hotels-including Starwood, Marriott, Hyatt, and others-says that 20 of its properties were hacked and payment card data was stolen by hackers. [PC Mag]

How Credit Card Companies Prey on Millennials

When Kelly Dilworth applied for a credit card in July, she was happy to learn that her spending limit was $13,000-a level most card companies don’t offer unless a customer is in the highest credit tier. Then she found out the card’s annual percentage rate (APR) was 21.24%, a level that used to be reserved for people with shabby credit. While U.S. interest rates remain below 1%, some of the same financial institutions allowed to borrow money from the government at historic lows are quietly jacking up rates on even people with commendable credit. [Newsweek]

Citi Can’t Stop AT&T From Saying “Thanks”. For Now

Two months ago, Citi sued AT&T–not over some huge multimillion-dollar account or bad business deal, but over AT&T’s daring use of the word “Thanks” in a new loyalty program. The bank asked a federal court to bar the phone giant from using the disputed term pending the outcome of the case, but the judge has shot that request down. At issue is Citi’s trademark over its “ThankYou from Citi” credit card rewards program and AT&T’s recently launched “AT&T Thanks” loyalty program. [Consumerist]

Green Dot/Mastercard Explain Walmart Prepaid Glitch

Details are emerging about the May 2016 prepaid glitch that hit a triumvirate of heavy hitters in the payments and retail space–namely, Green Dot, Mastercard and Walmart–and the scope has finally been quantified. More than 58,000 customers using Walmart branded prepaid cards were affected by their inability to access funds loaded on those cards. Green Dot explained that it had been in the midst of migrating processing services tied to its 2 million active prepaid accounts when the outage occurred. Green Dot said that roughly 1.2% of its active card base, which numbers roughly 4.8 million, had been hit by the service outage, and of the 58,000 plus that had been affected, roughly 12,600 were stymied from activating new cards or activating replacement cards. More than 41,000 accounts had transactions declined because of low balances that were reporting errors. [PYMNTS]

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This Week In Credit Card News: Self-Checkout Increases Theft; Oracle’s Point-Of Sale Systems Hacked

Does Self-Checkout Make Customer Want To Steal?

As it turns out, the self-checkout line has a big drawback. It seems to be passively encouraging shoppers to steal. A recent study concludes that consumers going through self-checkout lanes create about 4% loss—about doubling the rate of customers who go through standard checkout lines. And given that profit margins in grocery around the world are in the 3% to 5% range—those big upticks mean big issues for the bottom line. Are such systems—which run on an honor system of consumers actually ringing through all of their own items correctly—making it more likely that consumers will take advantage? [PYMNTS]

Increasing Use of Credit Cards by Subprime Borrowers

The number of subprime borrowers who are obtaining a new credit card is growing at a significant rate. Roughly half of subprime borrowers-those with a credit score of 620 or less-now have a credit card compared to 60% in 2007, which means the number of credit card holders in this category is returning to pre-recession levels. A new report indicates this group is acquiring the greatest number of new cards because they were most heavily impacted by the recession. In 2010 and 2011, nearly half of all credit card closures affected this group, even though they only represented one-third of credit card customers. []

Data Breach At Oracle’s MICROS Point-of-Sale Division

A Russian organized cybercrime group known for hacking into banks and retailers appears to have breached hundreds of computer systems at software giant Oracle Corp. More alarmingly, the attackers have compromised a customer support portal for companies using Oracle’s MICROS point-of-sale credit card payment systems. MICROS is among the top three point-of-sale vendors globally. Oracle’s MICROS division sells point-of-sale systems used at more than 330,000 cash registers worldwide. [Krebs on Security]

Australia to Crack Down on Prepaid Money Cards to Fight Terrorism Funding

Australia will strengthen the regulation of stored value cards as part of its crackdown on terrorism funding following revelations jihadists used prepaid money cards in the 2015 Paris attacks. Justice Minister Michael Keenan told a counter-terrorism financing summit that this was one of the reforms recommended by a review of Australia’s anti-money laundering and counter-terrorism financing legislation. [The Sydney Morning Herald]

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This Week In Credit Card News: Concerning Increase in Credit Card Debt; Are Chip Cards Very Secure?

New Security Flaw in Credit Card Chip System Revealed

The chip on our credit cards has been praised for making them nearly impossible to counterfeit. While the cards also contain a magnetic strip, that strip is supposed to tell the payment machine to use the chip. But there’s a relatively easy way to knock down that safeguard. Computer security researchers at the payment technology company NCR demonstrated how credit card thieves can rewrite the magnetic stripe code to make it appear like a chipless card again. This allows them to keep counterfeiting—just like they did before the nationwide switch to chip cards. [CNN Money]

Credit Cards Gaining Steam (Again)

Consumers learned a valuable financial lesson in the Great Recession: Many people reeled in their debt, became wary of high-interest loans and returned to spending only the cash they had on hand–until recently. Now, the number of credit card accounts in the U.S. is rising quickly. And based on current growth rates, the total number will soon be back to prerecession levels. It peaked at just over 496 million in the second quarter of 2008, and fell sharply during the global financial crisis by 24% to about 379 million in the third quarter of 2010. The number of cards in circulation has been rising steadily since, and now stands at more than 435 million. [CNBC]

Are Consumers Taking on Too Much Credit Card Debt?

U.S. banks are lending to consumers at the fastest rate since 2007 and the increasing debt is causing concern given the slowing economy. Lenders issued $18 billion in debt for card loans and other types of revolving credit within a three-month period. The second quarter results for several banks show an overall increase of credit card loans. Coupled with growing uncertainty from this year’s election and more consumers missing payments, experts think this increased lending could spell trouble for lenders down the road. []

Credit Card Issuers are Ditching Foreign Transaction Fees to Attract Big Spenders

Some good news for anyone who uses credit cards while traveling abroad—more issuers are ditching foreign transaction fees, potentially saving consumers a lot of money. Right now, 61 of 100 popular credit cards charge foreign transaction fees, down from 77 last year, according to a new analysis. [MarketWatch]

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This Week In Credit Card News: DNC Emails Contain Card Numbers; Card Info Still Confusing Consumers

WikiLeaks’ DNC Email Trove Includes Social Security Numbers, Credit Card Info

WikiLeaks posted 19,252 searchable emails, including 8,034 attachments, from inside the Democratic National Committee. WikiLeaks says the emails are from the accounts of seven top DNC officials between January 2015 and May 2016. They are part of WikiLeaks’ “Hillary Leaks” initiative. The emails contain interesting and potentially important political information, but they also include data that is sensitive in a different way. The data trove is easily searchable for personal information like credit card numbers, birthdays, and even Social Security numbers. []

Credit Card Companies Still Confusing Customers, CFPB Contends

The CFPB found consumers still have a tough time getting clear information from their credit card companies regarding their creditworthiness and information about the fees and payments. One of the top complaints centered on trouble understanding why a credit card company made the decision it did regarding an initial application for a credit card. Another issue consumers had: confusion over how payments are applied to accounts that have multiple balances. The consumers who complained said they didn’t receive clear information about how the payments made were applied to the multiple accounts. The CFPB also found consumers were charged with various fees and additional costs when using their credit cards, which they said were charged when things like automatic payment failed or a billing statement wasn’t delivered in a timely manner. Finally, the CFPB said consumers felt misled about credit card reward programs, with many complaining they had a hard time receiving the benefits that were promised as part of a special rewards programs. [PYMNTS]

MasterCard May Apply for China Payment License This Year

MasterCard hopes to apply this year to become a payment service provider in China after the government opened the market, but the company is still weighing whether to do so alone or with a partner. The world’s most populous country is “pretty crucial” to its future, but MasterCard is still studying rules in China that would affect its business and is hammering out a business plan. China in June allowed foreign payment card companies to operate in the country under new rules, potentially giving companies like MasterCard and Visa access to its $8.25 trillion card payment market. [Reuters]

28% of US Merchants Now Accept EMV Cards

Visa announced there are 326.8 million EMV chip cards in the U.S., and 1.3 million merchant locations able to process EMV transactions. The merchant number means that almost 28% of all merchants in the U.S. can accept the chip cards. Also, more than 75% of those EMV-ready merchants are small and medium-sized businesses. The number of payments using chip-based Visa cards reached 483 million at the end of last month, and chip-based payments accounted for about a quarter of the total dollars spent using Visa cards. [Retail Dive]

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