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News Scan Jun 2013

Credit Card News, Economy News, Banking Industry News - Jun 2013
June 2013
  • Big banks are developing a system to make mobile wallets more secure by walling off customer account information from merchants and other third parties.
  • Citigroup, U.S. Bancorp and other members of The Clearing House, an industry trade group, are jointly working on the technology.
  • Their aim is to address some of the rampant data-security concerns surrounding digital payments.
  • The system, dubbed Secure Cloud, essentially aims to provide a protective layer to customers who use the mobile wallets that have been developed by banks and nonbanks, like Google.
  • The technology, which The Clearing House will start testing later this year, will keep customers' credit and debit card information from leaking beyond the banking system into the less-regulated databases operated by merchants and technology vendors.
June 2013

U.S. first-quarter growth cut to 1.8 percent

Source: Reuters Category: Economy News
  • U.S. economic growth was more tepid than previously estimated in the first quarter, held back by a moderate pace of consumer spending, weak business investment and declining exports.
  • Gross domestic product expanded at a 1.8 percent annual rate, Output was previously reported to have risen at a 2.4 percent pace after a 0.4 percent stall speed in the fourth quarter.
  • When measured from the income side, the economy grew at a 2.5 percent rate, slower than the fourth-quarter's brisk 5.5 percent pace.
June 2013
  • The latest reason for banks to provide security for their mobile banking users: mobile malware attacks have increased more than six-fold in the past year.
  • The network security company analyzed data from the 12 months that ended this March and found the total number of malicious apps has grown to 276,000.
  • Three quarters of that software is some type of SMS Trojan, This type of malware is typically embedded in a benign-looking smartphone app (think of an alarm clock app) and sends a text message in the background to a premium service (such as a ring tone) that then charges that person a fee.
  • A majority of this software is being created in Russia or China, and is primarily written around the holiday season from October to January.
  • For banks, the study serves as a reminder that customers are vulnerable to the whims of malware designers that are nefariously working to scam victims.
  • Banks can of course build rules into their risk analytics software that might catch increases in cell charges. But in the end, the dispute lies with the cell phone carrier.
June 2013
  • Credit unions and members across the country are cashing in on the benefits offered by rewards cards, including introductory bonuses.
  • According to a new survey more than half of the cash-back credit cards (55% of those surveyed) offer introductory bonuses, but some cards are offering fewer points or require more spending to get the same bonus as last year.
  • The survey found that 53% of cards offer 1% cash back beginning with the first dollar of spending and that 47% offer higher payouts for specific expenditures such as gasoline, groceries or dining.
  • Also, only 22% of the cards surveyed charge annual fees and 65% do not have expiration dates on rewards, New York-based Bankrate.com found.
  • The full results of the survey, which included 55 cash-back credit cards offered by the largest banks and credit unions, plus other prominent cash-back offerings, is available online.
June 2013

Inflation data points to firming economy

Source: Reuters Category: Economy News
  • The consumer price index edged 0.1 percent higher last month after two straight months of declines, while the so-called core index, which excludes food and energy costs, rose 0.2 percent, just above the pace clocked in April.
  • The core index, which the U.S. central bank monitors closely because it is less volatile and provides a better sense of price trends, was up 1.7 percent in the 12 months through May.
  • The increase matched the gain in April and suggested that a worrisome downward trend in core inflation, which began a year ago, might be coming to an end as consumer demand strengthens.
  • The overall CPI was up 1.4 percent from a year-ago in May, up three-tenths of a percentage point from the prior month.
  • In May, the core price index rose with support from a 0.2 percent increase in clothing prices and a strong 0.3 percent increase in shelter costs.
June 2013
  • Mobile transactions at ATMs are expected to become the fastest-growing service in the coming years. Such transactions are initiated by a mobile phone instead of a plastic card.
  • Indeed, 54.9% of those polled said mobile-initiated ATM services will enjoy the fastest growth in the next five years.
  • The online survey, conducted during the second quarter of 2013, had 176 respondents in the ATM industry.
  • Meanwhile, the study found that deposit automation (41.8%) is the the number one recent technology to help develop the ATM, followed by enhanced security features (32.9%), new ATM hardware (28.1%), wireless communications (26%), ATM cash management and/or forecasting software (24%), migration to the XP operating platform (19.2%) and video on ATMS (8.9%).
  • While deposit automation has made the biggest recent impact on technological progress in our industry.
  • The survey found that the future of innovation lies in greater linkages between ATMs and customer owned devices in order to create a payments hub where online payments, mobile payments and ATM transactions are interconnected in a seamless customer-focused system.
June 2013

Credit dispute process fix coming soon

Source: Creditcards Category: Credit Card News
  • Beginning later this year, the big three credit bureaus -TransUnion, Experian and Equifax will, for the first time, begin scanning every document that you mail in, including the full text of your dispute letter and any evidence you send to back up your dispute.
  • The bureaus will then electronically transmit those documents to lenders and other data furnishers through an internal portal known as e-OSCAR (which the credit reporting agencies have long used to communicate disputes with lenders). That way, lenders will have a better idea of what exactly you're disputing.
  • Previously, credit bureaus sent lenders and other data furnishers a two- to three-digit code that categorized the dispute and, occasionally, a 100-character summary
  • The bureaus didn't include consumers' evidence, such as loan statements or copies of identification, however, because e-OSCAR wasn't set up to accept them.
June 2013
  • The U.S. government posted a budget deficit of $139 billion in May, 11 percent higher than a year ago.
  • May has had a deficit for 54 out of the last 59 years, as it is typically the month when the government refunds tax payments to U.S. citizens.
  • That is largely due to a 15 percent increase in tax receipts compared to last year, at $1.8 trillion, while spending has increased by only 1 percent.
  • Revenues have been boosted because payroll tax cuts expired, taxes went up on richer Americans, and the economy has started to recover.
  • Tax receipts last month, at $197 billion, were 9 percent higher than receipts in May 2012.
  • Government spending was $336 billion in May, above the year-ago level of $305 billion.
  • Adjusting for calendar changes, the U.S. May budget gap would be $110 billion, versus $125 billion in May 2012.
  • In the past seven months, government spending has increased 1 percent to $2.4 trillion compared to the same period last year.
June 2013
  • Lending is still a pretty good business. Intense and historically low net interest margins notwithstanding, margins on loans themselves are relatively healthy.
  • Across the industry, loan yields exceeded banks’ cost of funds by 4.54 percentage points in the first quarter, or a wider margin than has prevailed for most of the past decade.
  • It’s the compression in securities margins, combined with the growing representation of securities on bank balance sheets, that have squeezed the gap between the yield on total earning assets and the cost of funds — or the overall net interest margin — to 3.27%, the lowest level since late 2006.
  • Big banks make up 80% of industry assets, so their characteristics dominate industrywide figures. Yet the picture is similar for small banks.
  • At small banks, growth in margins on loans offset pressure from securities from early 2009 through the third quarter of 2011, as net interest margins expanded 41 basis points to 3.87%. NIMs have since fallen by 21 basis points to 3.66%.
June 2013

Fed: Card balances ticked up in April

Source: Creditcards Category: Credit Card News
  • Credit card balances inched higher in April, marking a rebound from March, amid signs of improvement in the key area of housing.
  • Revolving debt, which is mainly made up of credit card balances, climbed $700 million in April, reversing March’s revised $100 million reduction.
  • The amount of outstanding revolving debt was $849.8 billion, compared with a revised $849.1 billion in March, on a seasonally adjusted basis. That’s an increase of about 1 percent on an annualized basis.
  • Total consumer debt, which adds car loans and student loans to the revolving debt total, was $2.82 trillion, up $11.1 billion for the month, or almost 5 percent, annualized.
  • While consumer spending picked up slightly, another federal report issued Friday showed the job picture dimming a bit.
  • Card balances are only partly the result of consumer behavior, as lenders continue to keep a close eye on granting credit.