What We’re Reading This Week
Below are interesting stories the Banking.com staff has been reading over the past week. What have you been reading? Let us know in the comments section below.
- Between CARD Act and Fed Plan, Store-Card Deals Due for Overhaul
Banks are in for tougher negotiations with retailers over store credit card programs if a Federal Reserve proposal is finalized. Analysts say the plan would severely limit the number of people who qualify for a store card, likely leading to the reduction or end of incentive payments and other perks standard in private-label program contracts today. The Fed wants to clarify parts of the Credit Card Accountability, Responsibility and Disclosure Act by requiring issuers to use individual (not household) income when determining an applicant’s ability to pay. Retailers such as Home Depot Inc., David’s Bridal Inc. and Dress Barn Inc. argue this would disqualify a huge target audience for their store cards — stay-at-home moms — who lack independent income. The proposed clarification would apply to other credit card accounts, too.
- Your mobile phone is becoming your wallet
Welcome to the dawn of mobile currency. For years, tech companies have demoed flashy prototypes of systems that let customers use their mobile phones in place of cash or credit cards. This year, those systems are heading out of the labs and into the real world. The result: A gold rush on the next e-commerce frontier. “There’s a lot of money at stake if it’s done right,” says Omar Green, director of strategic mobile initiatives at Intuit (INTU). Starting Wednesday at Starbucks (SBUX, Fortune 500) stores throughout the U.S., the cashier can now scan your phone to deduct payment for your latté from the balance on your pre-loaded Starbucks card.
- Consumers Still Skeptical of Mobile Payments, But Attitudes May Change Soon
Despite the hype about mobile payments, most consumers still aren’t comfortable using smart phones to pay for things, according to new research from the Bank Administration Institute and Hitachi Consulting. That, however, could change, and change soon. The study also shows that debit remains consumers’ preferred payment choice, though its future has question marks because of new regulations.The sixth in a series that began in 1999, the newly released study is based on field research performed by Harris Interactive of a representative sample of 3,271 U.S. consumers who completed an online survey last July.
- The Smartest Credit Card Ever Made: Your Phone
Credit cards are extremely low tech — they contain simple data to authenticate a transaction. Now, several players, including banks to mobile carriers to financial networks, are looking at a new transaction device: your smartphone. Indeed, financial institutions such as PayPal and MasterCard have issued some customers adhesive chips for their phones. The credit card information is stuck to the phone and can be used at any of the 200,000 contactless readers in stores around the nation. That’s the low-tech version.
- New US bank aims to reinvent personal banking but faces traditional obstacles
Upon its US launch in 2011, BankSimple aims to provide an easy, intuitive, and social banking platform for people who appreciate simple online services. The web-based bank will partner with other financial institutions which will hold the actual deposits, while it focuses on the customer experience. However, its lack of physical presence and unconventional approach may limit its appeal. BankSimple aims to utilize sophisticated analytics to help consumers better manage their finances by providing an individualized service, catered to specific needs and goals. These systems will reflect the ongoing trend of consumer wellbeing in financial services, with consumers seeking to take control of their finances and use available resources to make better financial choices.
- The Digital Wallet of the Future
For many folks the idea of getting rid of your wallet and replacing it with an app on your smartphone seems like a no-brainer. Last fall, AT&T, Verizon and T-Mobile have teamed up to help make that happen.The three wireless rivals created a joint venture called Isis that hopes to use near filed communication chips (NFC) embedded in next generation smart phones to replace your credit cards. But there are some big barriers facing the wireless giants.