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Total U.S. household debt levels increased in the first quarter as already stressed credit card borrowers faced rising challenges, a report from the Federal Reserve Bank of New York said on Tuesday. 
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Apple Card credit-card holders can open an account with a 4.15% annual percentage yield.
Vineet Anand's insight:
Apple's much awaited savings account is now available to Apple Card holders.Industry impact - a very attractive rate of 4.15%, better than most CD rates in the market with a lock-in period for 8 to 12 months; depositors are shopping for better rates, leading to movement to greater competition to both established large banks and Neo-banks. For Apple a great ramp to increase services revenues from payment post the recent BNPL offering!
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Canada's Scotiabank is converting credit card repayments into buy now, pay later plans, with the option to pay off debt in three, six or 12-month fixed instalment payments.
Vineet Anand's insight:
Scotiabank enables its customers to convert purchases to BNPL using the mobile app or online
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Step, a teenager-focused US mobile banking startup, has raised $100 million in a Series C funding round led by General Catalyst and joined by Stripe and a host of celebrities including Will Smith and Jared Leto.
Vineet Anand's insight:
Growth to 1.5MM users in 6 months with good celebrity backs boosts Series C funding.
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Digital advertising platform Cardlytics is set to buy cash-back offers outfit Dosh for $275 million in cash and stock.
Vineet Anand's insight:
Dosh has a new buyer in Cardlytics for $275MM
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Mexican fintech Stori has raised $32.5 million in a Series B funding round to bring credit cards to the country's middles class.
Vineet Anand's insight:
Stori's underserved direction to enable credit cards for middle class gaining traction. Key hinderance being lack of credit history - a challenge resulting in credit cards in hands of 15% of Mexico's adult population!
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Basiq, a NAB, Westpac, Salesforce and Plaid-backed open banking platform, is introdocuing a new feature for lenders to aggregate outstanding consumer loans, including buy now, pay later debt, to get more visibility into customer liabilities.
Vineet Anand's insight:
BNPL while harnessing growth in US & Europe has seen 1 in 5 customers missing payments and interest fee debt that requires a new debt structure offering by Basiq. Credit card debt moving to BNPL to now customers taking debt to make good on payments.
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On the heels of filing for an IPO, Marqeta has added credit cards to its open API issuing and processing platform.
Vineet Anand's insight:
Marqeta from IPO yesterday to open API for credit card issuing and processing.
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Ally Financial has struck a $2.65 billion deal to buy CardWorks, enabling it to enter the credit card and merchant acquiring sectors.
Vineet Anand's insight:
Ally expands its business model with a $2.65B acquisitions of CardWorks giving it access to more than 11 million customers
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The card will charge no fees, pay daily cash rewards and sync with consumers’ iPhones to analyze their spending.
Vineet Anand's insight:
Apple Card issued by Goldman Sachs.. die hard Apple users will get the numbers rolling with its titanium look and etching. The rewards program is not the best, yet will offer cash back and deliver on privacy. Great foray for GS to make inroads post the start-up acquisition to offer this product!
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Mastercard continues its spending spree, agreeing to buy Ethoca, a firm that helps merchants and card issuers collaborate in real-time to identify and resolve fraud in digital commerce. Financial terms were not disclosed.
Vineet Anand's insight:
Ethoca to be acquired by MasterCard! MC eager to make investments with the recent acquisition of Transfast.
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Consumer champion Which? is calling on the Government to appoint a regulator to protect access to cash, as a combination of bank branch and cashpoint closures dries up the supply of notes and coins in small communities.
Vineet Anand's insight:
Access to cash and usage is being championed now in consumer group in UK. Similar bill has been raised by the NY regulator to allow cash usage at card acceptance merchants raising eyebrows at pilot locations like Amazon Go!
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Here’s something to think about the next time you are swigging down a frothy Double Mocha Macchiato at the viridian mermaid’s: your Starbucks Rewards app is one of the main reasons why the U.S. lags behind China, Sweden and many others in adopting mobile fintech and cryptopayment solutions.
Vineet Anand's insight:
Interesting article that touches at the surface level the rationale for slow adoption to mobile payments. I do not agree with the walled garden limitations holding back growth in mobile payments - the issue is more complex than shared by the author. Key drivers for US slower adoption, missing in the article, are EMV adoption by both issuers and merchants (Europe and Asia started more than a decade ago), lack of contactless cards (VISA and JPM are now getting serious), absence of dual cards, marketing rewards for usage of contactless, removing friction with Networks, Issuers, and Acquirers open to adopting EMV wherein US is one of the last developed markets. The market is large enough to support multiple players from Apple Pay, Google Pay, Venmo, PP, Starbucks and others - similar to Sweden, India, China, South Korea, UK and others. Technology adoption across the different personas needs to be enabled.
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From
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Fyre Festival attendees who booked their nightmare getaway on credit rather than debit are in a much better position to get a refund.
Vineet Anand's insight:
Fyre Festival.. heard of it, if not check out Netflix for a great documentary! Credit card users are attempting to dispute charges for services not rendered by the company.
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The European Central Bank is floating the idea of using instant payment rails to link up national card schemes as a means to break the duopoly enjoyed by Visa and Mastercard, who between them account for over 80% of all EU card transactions.
Vineet Anand's insight:
Will instant payments lead to the fall of V/MC powerhouse? Connecting the different EU based country payment systems can breed a new scheme that is cheaper and faster, however it needs a lot of collaboration between banks across countries and merchants.
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Visa reported strong earnings driven by growth in payments volume as more consumers use cards to make purchases, but warned that political uncertainties could affect consumer spending.
Vineet Anand's insight:
Payments volume neared $2.3 trillion, with 11 percent growth year over year,. Credit was $1.2 trillion up 9 percent, and debit, the remainder, up 13 percent. U.S. credit transactions at $498 billion, and $446 billion for debit. B2B acquisition of earth-port loss to MC leaves open the door for other buy options to drive B2B capability. Contactless card roll-out in US by JPM and with WF and BAM to follow suit.
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When JPMorgan Chase & Co. announced in November it would soon start mass-issuing contactless Vis
Vineet Anand's insight:
Amex Marrott Bonvoy cards to be contactless. JPM push for contactless with Visa will get issuers to pay more attention to contactless EMV.
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American Express has blocked attempts by Curve to load Amex cards into its all-in-one wallet, just days after the UK startup announced support for the feature.
Vineet Anand's insight:
Amex cites business reasons for blocking Curve after trial period since November with PS1 million in Billings!
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Petal, a US credit card startup that is ditching traditional credit scores in an effort to sign up young people and the underbanked, has closed a $30 million Series B funding round led by Peter Thiel's Valar Ventures.
Vineet Anand's insight:
Petal for underbanked closes $30 million funding! Product launched in October last year with no/low fees.
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Synchrony Financial said Walmart has agreed to drop a lawsuit against the bank that alleged it breached the terms of their long-running credit-card deal.
Vineet Anand's insight:
Walmart drops law suit against Synchrony; Sam club and Amazon relationships renewed with Synchrony!
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The European Commission has bashed Mastercard with a EUR570 million fine for obstructing merchant access to low-cost cross-border payment services.
Vineet Anand's insight:
EU cross-border interchange ruling of 2013; fines levied on MC.
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Vineet Anand's insight:
Fuze cards being used by fraudsters to store up to 30 debit and credit cards thereby reducing the number of cards to carry on their unscrupulous fraud with ease.
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Merchant plaintiffs and the state of New York filed motions Tuesday in a federal appellate court to
Vineet Anand's insight:
Surcharging will be permitted in NY with disclosure of the amount, placing more pressure on issuers on managing IC & reward costs!
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Major perks like airfare and cash back were meant to lead to higher returns. But consumers figured out how to game the system. Now banks are trying to figure out how to keep customers happy while cutting extras.
Vineet Anand's insight:
"What's in your wallet?" Banks over the past 18 months have been on acquisition spree with some very attractive rewards. As costs rise by 15% in Q3; Interchange fee push back by merchants; and rewards outstanding at record highs... will current macro economics create a pull back by issuers??
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SIX Payment Services has issued a SIM-based virtual credit card for making mobile payments in Austria.
Vineet Anand's insight:
myPayLife virtual card launches in Austria for Android contactless payments. Will it have ability to scale in light of limitations and competitiveness from Apple Pay, Samsung Pay and others.
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Curated by Vineet Anand
Payment Industry leader passionate about Fintech, Innovation in Banking, Product Management & Strategy, driving revenue growth through client management, business development and P&L focus.
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The Payments ecosystem is evolving at an unprecedented pace driven by mobile, cloud computing, start-up's challenging the behemoths, and new technologies. My personal collection of curated stories and blogs.
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US Household Debt Hits Record High: A Detailed Analysis
US household debt reached a record high with an increase of $184 billion, or 1.1%, from the last quarter, according to the Federal Reserve's latest quarterly report. Here are some key takeaways and insights from the data:
Debt Overview:
Delinquency Rates:
Economic Concerns: While the stock market has reacted positively to signs of slowing inflation in the CPI report this week, underlying economic activity remains a concern. Higher interest rates are expected to persist until at least November, with a potential reduction in September only if CPI continues to show a decline for the next three months.
Banking Sector Implications: Banks are likely to see increased activity in several areas:
Consumer Struggles: Inflation, particularly in food and rent, coupled with high interest rates, is creating significant financial strain for consumers. This is leading to increased reliance on credit cards and home equity loans for those who own homes. Buy Now, Pay Later (BNPL) services are also contributing to the debt burden, with 43% of BNPL users behind on payments.
Bank Fees and Bankruptcies: Despite consumer struggles, banks continue to benefit from non-interest income through late fees, with 121,000 bankruptcy notations recorded this quarter and 4.8% of consumer debt in third-party collections.
Looking Ahead: The past three months' data highlights the economic challenges consumers face. Banks will need to reassess risk management and policy measures to protect against rising credit lines with fewer delinquencies. Additionally, they must consider the broader picture of their commercial real estate (CRE) exposure, with close to $1 trillion in loans maturing this year.
This report underscores the need for vigilant financial strategies as both consumers and financial institutions navigate these challenging economic times.