Card Competition Bill Introduced; Our Growing Dependence On Credit Cards

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America’s Dependence on Credit Cards is Growing. The Fed’s Rate Hike Will Make It More Painful

As prices continue to rise, Americans are becoming increasingly reliant on credit cards to make purchases. And now, with the Federal Reserve’s latest three-quarter-percentage point hike, many of them will be paying more for the debt they’ve been accumulating. At a little over 18%, the average annual percentage rate on new credit cards is within a percentage point of its all-time high of 19% set in July of 1991. TransUnion found that there are more credit cards today, and there is more debt on those cards. TransUnion said 161.6 million people in the US—roughly half of the total population—had access to a credit card in the second quarter, a jump from 153.3 million a year earlier. In that same time frame, the average debt per borrower rose from $4,817 to $5,270. [CNN]

The average credit card debt per borrower has risen almost 10% in the past year.


Some Consumers Using Credit Card Rewards to Pay for Essentials Amid High Inflation

Americans are leaning into credit card rewards to help offset the rising costs of everyday purchases amid inflation concerns. A Wells Fargo study found that 92% of Americans are worried about rising inflation and nearly half of rewards cardholders have used these earned benefits to help offset the price of some everyday expenses. Almost three-quarters (71%) of Americans said they have rewards cards, and 45% of rewards cardholders said their credit card usage increased during the pandemic. What’s more, two-thirds of rewards cardholders (65%) said they care about credit card rewards now more than ever. [Fox Business]

House Lawmakers Add Credit Card Competition Bill

A companion bill taking aim at the dominance of Visa and Mastercard was introduced in the House Monday by Reps. Peter Welch (D-VT) and Lance Gooden (R-TX), following the Senate’s version of such legislation that landed in July. The bill seeks to inject more competition into the credit card network industry by requiring a minimum number of networks through which to route credit transactions, with at least one being a network other than Visa or Mastercard. That could include smaller rivals such as NYCE or Shazam, or other big credit card companies such as American Express or Discover Financial Services. [Payments Dive]

GOP Attorneys General Call on Credit Card Companies to Drop Plans for Gun Store Code

Two dozen Republican attorneys general are urging Visa, Mastercard, and American Express to drop their plans to adopt a new merchant category code for gun retailers, saying the move would infringe on consumers’ privacy. In a letter sent to the companies Tuesday, the attorneys general warn the credit card companies that they could face legal action if they move forward with the code adopted by the International Organization for Standardization. [CNBC]

Can the Visa-Mastercard Duopoly Be Broken?

America is home to the heftiest interchange fees of any major economy; costs are an order of magnitude greater than in Europe and China. That largely benefits two firms: Visa and Mastercard, which facilitate more than three-quarters of the country’s credit-card transactions. Doing so has made them two of the most profitable companies in the world, with net margins last year of 51% and 46% respectively. Rank every firm (excluding real-estate-investment trusts) in the S&P 500 index by their average net-profit margins last year, five years ago and a decade ago, and only four appear in the top 20 every time. Two are financial-information firms, Intercontinental Exchange and the CME Group. The others are Mastercard and Visa. [The Economist]

Citigroup Joins Industry Effort to Lend to People Without Credit Scores

Citigroup is joining a government-sponsored effort to expand access to credit in underserved communities. The bank is launching two pilot programs early next year under the Office of the Comptroller of the Currency’s Project REACh, or Roundtable for Economic Access and Change. One program will issue credit cards to people without credit scores, while the other will make it easier for small businesses owned by minorities, women and veterans to get credit. [The Wall Street Journal]

Number of BNPL Users Projected to Surge by 2027

The number of buy now, pay later users will surpass 900 million globally by 2027, increasing from 360 million in 2022, according to a new study from Juniper Research. “This substantial growth of 157% will be driven by the anticipated economic downturn, which will increase the demand for low-cost credit solutions,” the company said. The report noted that BNPL services do not require hard credit checks and an increasing number of merchants are accepting this payment method, making it easier to access for consumers than traditional credit. [CU Today]

A Goldman Sachs-Backed T-Mobile Credit Card Is Coming

T-Mobile, the second-largest wireless carrier in the United States, is planning to launch its own credit card. Although nothing has been announced yet, reports from Bloomberg indicate that Goldman Sachs and T-Mobile have reached a partnership agreement. This will be Goldman Sachs’ third credit card. It’s also the card issuer of the popular Apple Card and the My GM Rewards Card. For T-Mobile, it’s an opportunity to join the credit card world like rival Verizon did a few years ago. [The Motley Fool]

TD Bank, Target Credit Card Partnership to Continue Through 2030

Target’s RedCard credit card offerings will continue to be developed by the same team, as TD Bank and Target have extended their credit card partnership, which began in 2013, through 2030. With this contract extension, TD Bank will continue to be the exclusive issuer of Target co-branded and private label credit cards for consumers. In one of their most recent product innovations, Target and TD Bank expanded the RedCard Mastercard program and enabled cardholders to earn 2% instant savings on eligible dining and gas purchases and 1% everywhere else in addition to 5% at Target. Beyond the savings, the partnership enables Target to offer its customers other benefits like free shipping from on most items, extended return times and exclusive offers. [PYMNTS]

Visa Eyes B2B, Remittances for Growth

Visa is targeting the business-to-business and remittances markets for major growth in the future, Visa Chief Financial Officer Vasant Prabhu said. Prabhu noted the $20 trillion “cardable B2B portion” is almost as big as the company’s consumer payments business and looks a lot like it, but is growing faster. The company is also targeting the $800 billion remittances market, which revolves around migrants sending money cross-border to family and friends. The biggest geographic regions for that growth are in the U.S., the United Arab Emirates and Saudi Arabia due to money moving from those countries, the CFO said. [Payments Dive]

Majority Raises $37.5M to Further Serve Banking Needs of U.S. Migrants

Mobile bank for migrants Majority raised $37.5 million in a Series B funding round for expanding its suite of essential services as it continues its growth trajectory to support the nearly 50 million immigrants in the United States. Majority has seen monthly transaction volume among its migrant user-base increase four-fold this year and its revenue has increased 5x in the past year. To join Majority, members pay a monthly fee of $5.99 for a cross-section of immigrant-focused services that include a bank account, debit card, community discounts, free international money transfer and discounted international calling. People can sign up without a social security number or U.S. documentation. All they need to register for membership is an international government-issued ID and some proof of U.S. residence. [PYMNTS]

Kim Kardashian’s Credit Card Earrings Cause a Stir

Ka-ching. Kim Kardashian’s no stranger to racking up high bills at Balenciaga, her favorite fashion brand, and might’ve poked fun at that fact with her choice of accessories Tuesday. Stepping out in NYC to promote Season 2 of Hulu’s “The Kardashians” on “Good Morning America,” the reality star rocked a pair of Balenciaga’s sold-out, sought-after credit card earrings. [Page Six]