Personal Finance

This Week In Credit Card News: Amazon Tests ‘Just Walk Out’ Payment System; Credit Card Rewards Are Eroding

Amazon’s New Just Walk Out Cashierless Checkout System Uses RFID Tags to Track Apparel Purchases

Amazon introduced a new version of its Just Walk Out retail technology that allows customers to skip the cashier lines when they make a purchase by having their payment card automatically charged. The prior system leveraged a combination of ceiling-mounted cameras, shelf sensors and computer vision techniques to allow customers to shop and then leave the store without waiting to pay. The new system, designed for apparel retailers, instead uses RFID (Radio-frequency identification) tags that let customers grab clothes, shoes, hats and more and then walk out of the store without having to stand in line to pay. The system would even allow customers to wear their purchases out of the store. [Tech Crunch]

Credit Card Offers Are Eroding

When it comes to credit card offers and bonuses, the times they are a-changin’, and usually not for the better. Higher interest rates, inflation and other pressures have led card issuers to cut back on some offers. That means many credit cards have reduced the points or miles sign-on bonuses, or provide fewer months of no-interest charging or balance transfers. [Kiplinger]

Credit Reports Are Now Permanently Free Once a Week

Before the pandemic, consumers could only pull their credit reports for free once a year. But limited access is now a thing of the past. On Sept. 18, the three largest nationwide credit reporting agencies (NCRAs), Equifax, Experian and TransUnion, announced some good news for consumers: each agency will permanently offer free credit reports once a week. The NCRAs, which are required by federal law to provide each person with a free annual report, began offering weekly access in 2020, in what they described as an effort to help consumers deal with pandemic-related financial hardships. They extended the offer multiple times, but it was set to expire at the end of 2023 until this most recent announcement. [USA Today]

43% of Consumers Will Delay or Cancel a Purchase If Merchants Don’t Offer BNPL

As consumers become increasingly accustomed to convenient and flexible payment options, buy now, pay later (BNPL) as a payment method has gained significant popularity both among consumers who can spread retail purchases in several installments and merchants looking to prevent cart abandonment and sustain sales. Findings captured in a study done jointly by PYMNTS and Sezzle show that consumers place a high value on BNPL as a payment method, so much that nearly half of BNPL users would delay or cancel a purchase if a retailer or merchant did not provide it as a payment method. This sentiment was shared by 28% of both millennials and Gen Z consumers, highlighting the importance of BNPL for younger consumers. Similarly, nearly 26% of baby boomers and seniors also said they would cancel their purchase if BNPL was not available. [PYMNTS]

Banks Warn CFPB to Back Off on Scrutiny of Medical Credit Cards

Banks, debt collectors, and other companies said the Consumer Financial Protection Bureau lacks the authority to make specific rules governing medical credit cards and other financial products patients use to help pay health-care bills. But health-care credit cards and other targeted products operate much in the same way as financing products in other sectors, so there’s no need for new rules, trade groups representing banks and debt collection agencies said in comment letters to the CFPB ahead of a deadline last week. Health-care providers groups also warned that overregulating such products could lead to people postponing necessary but expensive procedures. What’s more, the CFPB doesn’t have the power to bring new regulations for medical payment products, the financial services industry said in its letters. [Bloomberg Law]

Fed Leaves Rates Unchanged

Federal Reserve officials left interest rates unchanged on Wednesday, a decision that gives policymakers more time to assess whether they have raised interest rates enough over the past 18 months to fully wrestle inflation under control. But policymakers also released a fresh set of economic projections suggesting that they still expect to make another rate increase before the end of 2023, and that borrowing costs are likely to remain higher than officials had previously expected in 2024. [The New York Times]

CFPB Boss Urges Oversight of Apple, Google Mobile Payments

The contactless payment functions on Apple and Google smartphones need to be regulated to protect consumer choice and provide a government check on private companies dominating U.S. payment systems, said Rohit Chopra, the CFPB director. While Google allows competing mobile wallets such as Samsung Pay to operate on Android handsets, Apple has only ever allowed Apple Pay, a restriction that has drawn pushback from banks around the world. Chopra said it may soon be time for the CFPB to step in and provide a level playing field for smaller fintechs that want to launch competing wallets. [American Banker]

It’s Not Just Taylor Swift: Banks Sponsor More Concerts and Festivals

The banking industry is directing more of its sponsorship dollars to music festivals and concert venues in an effort to attract younger clients with disposable income. About 39% of the industry’s total sponsorship portfolio is now dedicated to music-related events and properties, up from 25% in 2021, according to a report from SponsorUnited, a data provider for the sports and entertainment industries. Over the past two years, bank sponsorships of music festivals surged by 165%, while bank sponsorship of concert venues rose by 94%. That rapid growth is in contrast with the trends in major professional sports leagues. Bank sponsorships in pro sports grew by just 5% during the same time frame. [American Banker]

CFPB Outlines Requirements for Lenders Using Artificial Intelligence to Deny Credit

The CFPB released guidelines for lenders to adhere to when using artificial intelligence and other models to deny consumers credit. The guidance outlines legal requirements creditors must meet in providing specific and accurate reasons why adverse actions were taken against consumers. In short, CFPB said, creditors can’t simply use sample adverse action forms and checklists if they do not reflect the actual reason credit was denied or credit conditions were changed. [Financial Regulation News]

Mastercard and Oracle Partner to Automate B2B Payments

Mastercard and Oracle have announced a partnership to automate B2B payments for enterprise customers. The collaboration will integrate Mastercard’s virtual card platform into the Oracle Fusion Cloud Enterprise Resource Planning automating the B2B finance and payment process. The partnership aims to address the challenges faced by many companies in making commercial payments, such as disparate data, systems and processes. By leveraging Mastercard’s virtual card technology, Oracle will enable organizations to securely connect and share information across all trading parties, simplifying end-to-end financial transactions for corporate customers. [PYMNTS]

Cap Credit Card Interest Rates to Help Americans Hammered by Bidenomics

Credit card interest rates are at record levels. Annual percentage rates have soared, with some going as high as 36%. The average is 24.45%; that compares with an average of less than 12% a decade ago. The total amount of credit card debt is more than $1 trillion, the highest in history. Delinquent payment rates are at their highest level in a decade. Compounding the problem, President Joe Biden’s inflationary policies have pushed consumer prices to the stratosphere. And as costs rise, Americans are forced to use their credit cards to cover basic necessities like rent and groceries. In a flailing attempt to tackle the issue, the Federal Reserve has raised interest rates higher and higher. Banks passed those costs along to consumers. American households get the short straw: Not only are they paying more for basic necessities, they’re now paying to clean up the Biden administration’s financial mess. This burden falls heaviest on the nearly 50% of Americans carrying a credit-card balance, many struggling to make ends meet. [New York Post]

Credit Card Rate Cap Bill Would ‘Severely Restrict’ Credit Access

CUNA, NAFCU, and other financial trade associations representing virtually all banks and credit unions voiced their opposition to legislation from Sen. Josh Hawley, R-Mo., that would cap credit card interest rates at 18%. The organizations note that such a cap would “severely restrict” the availability of this type of credit for millions of consumers across this nation: “Including annual fees and other fees in the calculation will cause credit cards to exceed the cap, resulting in the elimination or reduction of valuable credit card features like cash back and other rewards. This cap will also impede innovative credit cards with non-credit features designed to attract underserved groups because even a nominal annual fee could result in an all-in rate that exceeds the cap. [CUNA]

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