Who Will Crown Cash, Who Will Kiss it Goodbye?

Posted By: Elizabeth Rowe | September 30, 2016 | 0 Comments

Kiss Your Cash Goodbye? This Year is Set to be a Turning Point for Credit

27 September 2016, Market Watch

While 85% of payment transactions globally are cash, in 2016, we have finally reached the watershed moment when the value of all card payments (debit, credit and prepaid) will finally surpass the value of cash transactions. Cash is expensive and easy to use for black market/illegal/tax-dodging activities, but in developed countries, some still prefer cash. Why? It’s not hackable by cybercrooks or as susceptible to government and bank monitoring.

Credit Card Interest Rates Hit New Highs

26 September 2016, The Reporter-Times

Consumer credit continues its inexorable climb, as does the APR of credit card debt. Both auto loans and student loan debt outstandings have hit new highs, credit card debt continues to grow and is breaking all previous records, and average credit card APR is now 15.22%. Total card dollar volumes have been rising, but much of that use is coming from 10 million new cardholders of which 52% are under the age of 30. And have delinquency rates increased? No, not at all.


Financial Indicators Positive for Credit Unions

28 September 2016, Credit Union Times

As a whole, second quarter 2016 financial indicators for the CU industry were quite strong. In the quarter, median loan growth was up 4.3%, median asset growth was 3.2%, and the median rate of growth in deposits and shares was 3.3%. The bulk of credit unions (79%) had positive net income for the first half of the year and impressively, median loan growth was positive in every single state.

Wells Claws Back CEO Pay–Stumpf to Cede $41M as Board Targets Executives in Wake of Sales Scandal

28 September 2016, The Wall Street Journal

The Wells Fargo board of directors is finally disciplining the most senior executives involved in its account opening fraud. To wit: CEO John Stumpf has “agreed to forgo all unvested equity awarded to him, worth $41 million; not take a bonus during 2016; take no salary during an independent investigation by the board, and recuse himself from all deliberations related to the bank’s sales-tactics scandal.” Carrie Tolstedt, the EVP who’s been leading the community banking division of Wells, will forfeit $19M in unvested equity awards. The sell-or-die policies at Wells are years old as over time, the bank developed a culture famous for hourly phone calls to branch managers checking on new account openings, fantastically aggressive goal setting, associates forced to work additional hours at night or on the weekends to cold-call for those additional account openings and even (according to reports) a whistleblower hotline that allowed HR to circle back to managers with strategies for firing those whistleblowers “with cause.” The goal of eight products per household has been on the record (that I can find) since 2006 and has drawn the attention of investigative reporters at Bloomberg since 2010 and at the LA Times since 2013.


Banks Will Start Actually Using Blockchain Next Year: IBM Report

28 September 2016, Credit Union Journal

IBM’s Institute for Business Value interviewed executives with 200 global banks and (incredibly) 15% of them said they’d be running blockchain solutions in 2017. That’s right – 15% of respondents said they’d have “have fully implemented, full-scale commercial solutions in 2017. Behind them, another 65% indicated they plan to have blockchain solutions in production over the next three years.” And what will they be doing with blockchain? 80% of those with blockchain plans said blockchain technology would improve trade finance, corporate lending, and reference data. And what are the impediments? Regulatory constraints, a clear ROI, and the overall immaturity of the tech.

Citi Joins Early Warning’s clearXchange Network

28 September 2016, Business Wire

Continuing its run as a late joiner, Citibank has joined clearXchange and will have the network live in early 2017. clearXchange’s CEO sounded genuinely pleased to finally have Citi on board and considers the network well on its way to eventually locking down every U.S. bank as a member. When Citi’s integrated its systems, clearXchange will have its P2P payments (brand name: Zelle) available to more than 100 million online banking and 70 million mobile banking users in the U.S.


The Biggest Debate in Retail: Should You Pay More to Use a Credit Card?

29 September 2016, The Wall Street Journal

The Supreme Court has agreed to take up a case that challenges the legality of legislative credit card surcharge bans in 10 states. Internationally, this issue of – Who will pay for credit card interchange? – is a hot one. The EU has decided that merchants cannot add surcharges to credit card transactions because those surcharges are discriminatory against consumers based on their payment methods. Australia is clamping down on the amount merchants can surcharge for credit card transactions. And so we are joining the fray, and the Supreme Court has put the issue on it is docket for its next session.

An Appellate Court Victory Bolsters AmEx in its Efforts to Enforce Acceptance Terms

27 September 2016, Digital Transactions

Catching the payments industry flatfooted, a U.S. Court of Appeals has overturned a District Court ruling that American Express’s non-discriminatory provisions violate the Sherman Antitrust Act. In reversing the lower court’s ruling, the appellate court cited the two markets in which AmEx must compete: It must win both merchant acceptance and cardholder loyalty. And while merchants want to pay lower fees, American Express uses its high fees to create the rich customer rewards that stimulate demand for its product. That demand drives its affluent cardholders to merchants accepting AmEx which ultimately benefits merchants because those cardholders extend their AmEx loyalty to the merchants accepting their favorite card. And if the merchants don’t like it, great – they can just stop accepting AmEx, which in the case of a smaller network is easy to do.

CFPB Takes Action Against Six Loan Companies

27 September 2016, Credit Union Times

The CFPB has targeted six fairly shady players in the non-traditional financial services sector which may inspire some of the players in that sector to mend at least a few of their ways and means. Auto title loan companies were fined for presenting borrowers with misleading information that led them to believe they had to renew their expensive loans for using debt collection strategies that shared the borrowers debt info with “employers, friends and relatives.” A credit repair firm charged illegal advance fees and in exchange, guaranteed it could “remove virtually all negative information from credit reports and boost credit scores by significant amounts.”

Elizabeth Rowe

Elizabeth Rowe

Elizabeth tracks the shifting payments landscape for both PSCU and its member owners. Focusing on the interstice of the economy, competition, consumers, technology, payment products and channels and regulatory guidance, Elizabeth gleans the key challenges and opportunities facing our industry, our strategic plans and our success fulfilling our mandate of serving the American consumer.
Elizabeth Rowe




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