A recent survey conducted by CNET revealed that nearly half of US adults have signed up for a subscription service’s free trial and forgotten to cancel it, leading to hundreds of dollars in wasted money each year. To prevent this, using a virtual credit card can be a simple solution as many are one-time use only, making them ideal for free subscriptions. Even if the virtual card number can be used multiple times, it can typically be locked to prevent new charges. The ease of using virtual cards can help consumers avoid unnecessary charges and save on subscription costs.
In a move that signifies a shift in consumer lending, Goldman Sachs is in discussions to transfer its General Motors credit card program to Barclays. With approximately $2 billion in balances outstanding, Barclays is currently the leading contender to take over the issuance of GM credit cards. This potential deal comes as Goldman Sachs has faced challenges in adding customers to its credit card program, with frustrations stemming from what they perceive to be inadequate promotional efforts by GM car dealers. While no agreement has been finalized yet, the shift of the GM credit card program could have significant implications for both institutions.
The Biden administration’s efforts to cap credit card late fees at $8 per transaction, down from the current average of $32, could have implications for both consumers and retailers. While this move may benefit consumers, it is expected to be met with resistance from banks and retailers, including department stores like Nordstrom, Macy’s, and Kohl’s, which heavily rely on credit card programs for revenue. A significant portion of Macy’s operating profits are derived from its credit card program, highlighting the importance of credit cards as a revenue source for department stores.
A recent study by PYMNTS Intelligence highlights a growing preference among consumers for credit cards issued by local banks or credit unions over national banks. The study found that credit unions and community banks are gaining traction in the consumer credit card space, with 24% of consumers expressing a preference for a local option to issue their primary credit card. This trend is particularly notable among high-spending revolvers, with credit unions performing favorably in this segment. The shift towards local banking options could have implications for the credit card industry moving forward.
Small and medium-sized businesses (SMBs) in the healthcare sector are increasingly opting for real-time payments (RTP) over credit cards and checks for account-to-account transfers. RTP payments have become the preferred choice for 83% of SMB healthcare providers, with instant bank account-to-account payments and instant PayPal being the top choices. The preference for real-time payments is particularly pronounced among SMBs affiliated with national or regional banks compared to local banks or credit unions, showcasing a shift towards faster payment methods in this sector.
As digital payments continue to grow in popularity, Mastercard reported a significant increase in tokenized transactions, which grew 50% year over year. The shift to digital payments is becoming increasingly prevalent, with contactless and tokenized transactions driving this growth. Tokenization is creating a positive cycle for Mastercard, resulting in lower fraud rates, higher approval rates, and a better consumer experience. Approximately one in four transactions on the Mastercard network are tokenized today, reflecting the increasing preference for secure and efficient digital payment methods.
