Venmo and Zelle May Not Be Free for Much Longer
With new technologies come new rules governing how they are used. So it is with peer-to-peer electronic payments. Last week a US Senate committee joined the debate over whether they’re analogous to cash or to bank-payment channels. It’s an essential distinction — for both consumers and the companies that provide this free service. Yet while no bank would accept liability if a customer lost their wallet to a pickpocket, the senators’ debate focused on who’s responsible when fraudsters target electronic wallets. Last year, customers of the three largest lenders – Bank of America, JPMorgan Chase and Wells Fargo – lost a total of $370 million via Zelle, the platform these banks jointly own with four others. The banks reimbursed only around $100 million of that, leaving consumers to shoulder the rest. While small in the context of overall volume that go through Zelle – $806 billion last year, of which these banks did 73% – that’s cold comfort for the customers. [Bloomberg]
The Fed May Cut Rates Soon
Consumers have been waiting for interest rate cuts since the Federal Reserve stopped raising them a year ago. They may soon get their wish. Fed policy makers at their July meeting opted to hold the federal funds rate at 5.25% to 5.50%, the range it’s sat at since the last increase in July 2023. At the same time, they indicated that inflation was getting closer to the level where they would be comfortable cutting rates. Investors have been betting on rate cuts starting before the end of this year, possibly as early as September. The highest Fed interest rates in almost two decades have driven up the cost of borrowing for everything from buying a home or automobile to financing a college education. [The Wall Street Journal]
Bank of England Cuts Rates After Fed Held Off
The Bank of England cut its key interest rate for the first time in over four years, leaving the Federal Reserve among a dwindling number of central banks that have yet to cut borrowing costs in the face of cooling inflation. The U.K. central bank lowered its benchmark lending rate by a quarter-percentage point to 5% Thursday. It had kept rates at their highest levels since 2008 for the past year, crimping lending and heaping pressure on the U.K.’s heavily indebted government. Investors went into the meeting split over whether the central bank would cut now or wait for further signals of ebbing inflation. [The Wall Street Journal]
Chase to Bar Customers from Using Credit Cards for ‘Pay Later’ Loans
JPMorgan Chase, the nation’s largest credit card issuer, will bar customers from using its credit cards to repay increasingly popular “buy now, pay later” installment loans. Chase said in an emailed statement that buy now, pay later installment loans “are a form of credit” and that the bank did “not generally allow customers to pay for credit products” with their Chase credit cards. Chase has been alerting customers about the change, which takes effect on Oct. 10. Chase is not the first credit card issuer to make the move. Capital One, the fourth-largest card issuer, barred use of its credit cards for pay later loans in late 2020. [The New York Times]
Is Visa Readying for an Expiration of Cards?
While doubts about the long-term sustainability of the card business have been swirling around Visa for years, threats on the horizon seem to be coming into sharper focus lately. Digital competition, including real-time payments, related pay-by-bank options and buy now, pay later financing, are increasing the alternatives to card payments. In addition, legislative and regulatory pressures are building. The card business is more than a mature industry, with roots reaching back nearly a century. And in many parts of the world, it’s fading as a payments tool. In Asia, digital alternatives such as Alipay linked to smartphones are gaining more traction. In Africa, digital wallets are similarly advancing more rapidly than cards. And in India and Brazil, nationalized real-time payments systems are letting consumers bypass cards. In the U.S., two such real-time payments systems, RTP and FedNow, are now competing for growth too. [Payments Dive]
Maryland Becomes First State to Pass Law Against Gift Card Draining
Maryland is the first state in the nation to pass a law aimed at thwarting an increasingly common scam known as gift card draining. The Gift Card Scams Prevention Act of 2024 mandates that gift cards sold in stores be encased in secure packaging so that thieves can’t illegally obtain their numbers. Without proper packaging, experts say, the funds stored on gift cards are vulnerable because their barcodes and PIN numbers, concealed only by a scratch off sticker, are visible. Thieves can easily remove the sticker covering the PIN and replace it with a new one so a card appears to be unused. [CBS News]
The Bank of Starbucks: Coffee Retailer Has $1.77 Billion in Unredeemed Gift Cards
The latest Starbucks results show the retailer may have trouble selling coffee, but it is getting better at selling customers the right to buy coffee in the future. Starbucks said customers have $1.77 billion stored in unredeemed gift cards, up 9% from the previous year. [MarketWatch]
DoorDash Extends Free Delivery and Promotional Discounts on Chase Credit Cards Through 2027
If you have a Chase credit card, you may now be eligible for free unlimited deliveries and up to $20 off each month through 2027. DoorDash and Chase are expanding their partnership, which includes complimentary DashPass for most Chase credit cardholders. The complimentary DashPass subscription through Chase was set to expire sometime in 2024. Now, if you have one of the Chase Sapphire cards, you can enjoy unlimited free deliveries until it’s time to elect the next-next president. Most other Chase credit card customers will get at least six months of complimentary DashPass. [Business Insider]
I Have a Credit Card Just for My Rent, and It’s Totally Worth It
The Bilt Rewards program lets you earn a point per dollar on your rent, with a cap of 100,000 Bilt Points a year. Making sure your rent gets reported to the credit bureaus can also be a great way to build a strong credit record. While it’s not a cash-back card, Bilt’s points can be redeemed in a variety of ways including the company’s rotating selection of home décor and art, fitness classes and Amazon purchases. You can even use points toward your rent or your down payment on a house, with redemption values around a penny a point. [The Wall Street Journal]
Wells Fargo and Expedia Introduce New Credit Cards
Wells Fargo and Expedia Group have partnered to introduce two new credit cards: the One Key Card and One Key+ Card. Both cards allow you to earn rewards in the One Key program, which is the loyalty program for Expedia, Hotels.com and Vrbo. In addition to useful bonus spending categories for common purchases, these cards feature welcome bonuses worth $400 to $600. If you have the old Hotels.com Rewards Visa Credit Card, you’ll be transitioned to the no annual fee One Key Card. [CNBC]
Affirm Asks CFPB to Consider Unique Business Model of BNPL
With the CFPB winding down its commentary period for potential buy now, pay later regulations, Affirm submitted a detailed response advocating for adjustments that it says will better accommodate the unique aspects of BNPL products. The CFPB’s proposed Interpretive Rule under the Truth in Lending Act and Regulation Z aims to extend consumer protection measures similar to those for traditional credit cards. While Affirm’s filing supports the CFPB’s intent to enhance consumer safeguards, it has urged the CFPB to tailor its regulatory approach to avoid consumer confusion and undue compliance challenges. Other BNPL firms have asked for more time to get ready for the new rule before its implementation. [PYMNTS]
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