Bank Failures Changed Fed’s Course on Rates, But in an Unexpected Way
The recent collapse of two midsize banks changed the Federal Reserve’s course of action on tightening monetary policy, but not necessarily in the way some market participants and observers expected. The Fed raised its benchmark interest rate by a quarter percentage point, a more modest hike than was expected before the failures of Silicon Valley Bank and Signature Bank earlier this month. It also indicated that it would stop raising rates sooner than it previously projected. Yet, Fed Chair Jerome Powell made clear that this slight change of course was not the result of financial stability concerns. Instead, he said, the committee felt it could pull back because the banking sector volatility that followed the failures served as its own check on inflation. [American Banker]
China’s Experience with Mobile Payments Highlights the Pros and Cons of a Cashless Society
The benefits of mobile payments may seem trivial: they allow people to shop without the need for cash. But mobile payments can help reduce costs on essentials like food bills. People using mobile payments for their shopping were able to take advantage of time-sensitive online promotional offers at the checkout. Mobile payments can boost rural household consumption by making shopping easier for communities that may not have access to traditional financial services such as banks. Mobile payments have also been found to create business opportunities by helping small entrepreneurs become more nimble, increasing their appetite for risk and easing credit constraints by allowing them to take advantage of micro-lending services. [The Conversation]
Crypto Credit Cards, Once a White-Hot Trend, Have Started to Fizzle
For the past few years, crypto-earning credit cards have seemed destined to be the next big thing. Announcements about forthcoming products poured in throughout 2020, cards started hitting the market in earnest in 2021, and by mid-2022, it looked like the trend would only accelerate. But that was before a crypto winter set in late that year and cooled the total value of the largest 100 cryptocurrencies by about 70% from a year earlier. The fledgling crypto credit card segment was not immune. Some cards were discontinued entirely, others eliminated the ability to redeem rewards for cryptocurrency, and still others that were promised have yet to make it to the market. [Yahoo Finance]
CFPB to Require Credit Card Issuers to Share More Data for Comparison Site
The Consumer Financial Protection Bureau announced this week that it is requiring many credit card issuers to report more details about the types of credit card plans they offer on a CFPB survey, with the goal of creating a website for consumers to compare card offerings. However, the American Bankers Association and other associations have raised concerns about the process the CFPB used to implement the changes, saying the agency didn’t properly disclose the revisions it was pursuing nor give the public a realistic chance to comment on those revisions. [ABA Banking Journal]
Gen Z is Chalking Up Credit Card Debt and Falling Behind on Their Payments Faster Than any Other Generation
Those in Generation Z, born between 1997 and 2012, are racking up credit card debt faster than any other generation, according to a March 16 report from Credit Karma. It’s also the only demographic group to see an increase in debt that’s more than 30 days overdue. Gen Z Americans racked up $2,781 worth of average credit card debt in the fourth quarter of 2022. Although Gen Z’s credit card debt was the lowest among all five generations tracked, it grew at the fastest pace of around 6% in comparison to the three months through May 2022. [Business Insider]
Crypto Entrepreneur and Celebrity Promoters Face SEC Charges
The Securities and Exchange Commission announced charges on Wednesday against a prominent cryptocurrency entrepreneur and a group of celebrities who promoted his ventures, including the actress Lindsay Lohan. The SEC filed a complaint in federal court charging the entrepreneur, Justin Sun, with securities law violations linked to his management of three crypto companies. The agency also charged eight celebrities, including Ms. Lohan and the social media influencer Jake Paul, with illegally promoting Mr. Sun’s cryptocurrencies. Ms. Lohan, Mr. Paul and four of the other celebrities agreed to pay a total of $400,000 to settle the charges. [The New York Times]
Forget Luxury Goods, U.S. Shoppers Are Now Using Buy-Now-Pay-Later Services to Pay for Groceries
U.S. shoppers are using buy-now-pay-later services to shop for groceries as the cost-of-living crisis rages on. According to new data from Adobe Analytics, in the first two months of 2023, groceries’ share of the spending done via BNPL services grew by 40%. In contrast, BNPL usage for apparel products grew by 8% and fell by 14% for electronics. While the number of online purchases made using BNPL services grew in the last two months, revenue fell by 19% year-over-year, indicating that customers are using these services for cheaper items. [Business Insider]
A New Report Reveals Many Credit Card Holders Don’t Claim Their Rewards
According to a new CreditCards.com survey, 23% of rewards cardholders haven’t redeemed any rewards over the past year. That’s an improvement from the 31% of rewards card users who didn’t redeem any rewards in 2020, but almost a quarter of cash back and travel cardholders still leave money on the table. In the realm of credit card rewards, cash back remains king. During the past year, more than half (55%) of rewards cardholders redeemed their rewards for cash back or gift cards. A quarter (25%) of rewards card users redeemed for travel, such as a free hotel stay or airfare. [CNBC]
Washington, DC: Climate Protesters Cut Credit Cards Outside Chase, Citibank, Wells Fargo, Bank of America
Protesters gathered Tuesday in Washington, D.C., outside several major U.S. banks, where they cut up their credit cards and called for the institutions to stop spending money to promote the fossil fuel industry. Videos taken at the scene show climate activists of the ”Old & Bold Third Act” movement using scissors to chop up credit cards outside Chase, Citibank, Wells Fargo and Bank of America. They also chanted about wanting “climate justice” and to shut down the “big bad climate banks.” [Fox Business]
Mastercard Pilots Digital ID Service for Online Shopping in Australia
Mastercard has developed a new pilot service with Service NSW and alcohol delivery service Tipple to protect customers identity information and ensure age verification with the purchase of age restricted goods online. This move comes as Mastercard makes more moves in the virtual commerce industry and grows its presence in the metaverse. [Power Retail]
Amazon and Panera Team Up to Help You Pay for Orders and Access Rewards with Just the Palm of your Hand
Panera is taking MyPanera to a whole new level with Amazon One’s newly launched loyalty linking capability. Amazon One, our palm recognition service that lets customers enter, identify, and pay, will for the first time provide the additional capability of linking MyPanera loyalty memberships to customers’ Amazon One profiles. Panera is the first restaurant chain to offer Amazon One’s new loyalty linking capability, allowing guests to take full advantage of their MyPanera loyalty program, as well as pay for their purchases with just their palm. [Yahoo Finance]
Mastercard Acquires Swedish Cyber-Security Firm Baffin Bay
Mastercard has acquired Swedish cybersecurity firm Baffin Bay as part of plans to build a multi-layered protective shield for customers across the world. Baffin Bay Networks’ cloud-based service uses AI technology to automatically filter and counteract malicious internet traffic at both the network and application level. The acquisition further strengthens Mastercard’s broader services offerings beyond the payment transaction as it moves to integrate its solutions into an all-encompassing cyber service. [Finextra]
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