CardRates.com Weekly Credit Card Update — September 3, 2021

For media inquiries on these stories and more, contact credit card expert and industry analyst Bill Hardekopf at (205) 985-9725 or billh@cardrates.com.

Affirm shares jumped 40% in the after-hours session Friday after the fintech company said it has partnered with Amazon to allow a pay-over-time option at Amazon’s checkout. Select Amazon customers will have the option to split the total cost of purchases of $50 or more, and Amazon plans to make Affirm available to more customers in the coming months.

Amazon “is always looking to add flexible payment options, and Affirm does just that” with no late or hidden fees, an Amazon spokesperson said. Buy Now, Pay Later companies such as Affirm offer a twist on the old layaway plan, allowing consumers to buy in installments and charging them either simple interest or no interest at all and with instant access to what they bought.

• Story By: Claudia Assis, MarketWatch

Credit card customers’ expectations for credit cards are revolving, and a new J.D. Power survey shows many card issuers are failing to keep up.  The decrease in customer satisfaction was led by midsized card issuers who couldn’t keep up with the evolving needs of consumers during today’s volatile economy. 

On a 1,000-point scale, overall satisfaction fell to 805, down from 811 a year before. Among midsize lenders, the score dropped by 17 points to 796. American Express ranked highest in customer satisfaction among national issuers, with a score of 838. Discover at 837 ranked second and Capital One at 815 ranked third. Among midsize issuers, Goldman Sachs ranks highest in customer satisfaction with a score of 864. BB&T, Huntington and PNC rank second in a tie, each with a score of 817.

• Story By: Kelsey Ramirez, Fox Business

PayPal is taking its first steps toward developing and registering an investment platform within PayPal called Invest at PayPal, and it could launch next year. Rival Square added stock trading, including fractional share trading, to its app in 2019, taking on the popular brokerage app Robinhood. Now, PayPal is ready to follow in Square’s footsteps again.

PayPal has the advantage of serving over 400 million active accounts, most of which have linked their bank account information to the platform already. By comparison, Robinhood reports having just 21 million active accounts, and Cash App has about 40 million users. That makes PayPal a significant threat to Robinhood as the former is also looking to attract first-time investors. You’re much more likely to use the app already installed on your phone (PayPal) than you are to download and set up a whole new account (Robinhood).

• Story By: Adam Levy, Nasdaq

Australia’s treasurer has asked the central bank to consider forcing large- and medium-sized banks and debit card issuers to provide multiple network options for merchants to route “tap-and-go” payments.

In a letter dated Aug. 30 to the Reserve Bank of Australia, Josh Frydenberg threw the government’s weight behind “least-cost routing”, which would allow businesses to choose cheaper domestic systems instead of the prevalent but more expensive Visa and Mastercard networks.

• Story By: Paulina Duran, Reuters

Walgreens continues building on its financial services offerings. The leading drugstore retailer is teaming up with Mastercard to launch Scarlet, a bank account and debit card issued by MetaBank and available exclusively at Walgreens. Scarlet links to Walgreens cash rewards, and also offers personal finance planning tools and payment solutions.

Scarlet will be available at more than 9,000 Walgreens stores nationwide, online, and via the Walgreens mobile app. Accountholders will receive 3% Walgreens cash rewards on eligible purchases at Walgreens and Duane Reade stores, Walgreens.com, and the Walgreens mobile app. They will also obtain 1% cash rewards on eligible purchases wherever Mastercard is accepted.

• Story By: Dan Berthiaume, Chain Store Age

American Express temporarily raised the transfer ratios of 12 of their hotel and airlines partners. Simply put, your Amex Membership Rewards are now worth more during this promotion. American Express cards that earn Membership Rewards points are able to transfer their points to 18 different airline loyalty programs and 3 hotel loyalty programs.

The advantage of earning flexible points is that cardholders are able to earn rewards that can be used with a multitude of travel providers, rather than earning rewards with one singular brand. Plus, you can take advantage of sweet spots in each rewards program.

• Story By: Brett Holzhauer, CNBC

Buy now, pay later is gaining steam. BNPL, as it’s also known, is a way to spread out interest-free payments for consumers, who can also avoid late fees if they pay on time. They also can sidestep credit card balances that accrue with interest until the cardholder pays them off.

While BNPL has been on the radar of payment companies, two recent events give validity to views that it’s a long-term trend, not a flash-in-the-pan amid the coronavirus pandemic. Digital payment company Square on Aug. 1 agreed to purchase BNPL provider Afterpay in an all-stock, $29 billion deal. Then Amazon announced Aug. 27 that it’s working with Affirm, sending its shares soaring. Amazon said it’s testing Affirm’s BNPL plans on orders of $50 or more. The e-commerce giant plans to make BNPL more broadly available in the coming months. All these players have an eye toward younger consumers.

• Story By: Reinhardt Krause, Investor’s Business Daily

Due to the Covid-19 pandemic, consumers were now prioritizing contactless payments as people were less than enthusiastic about paying with cash and/or wiping down their cards with hand sanitizer. Merchants were suddenly encouraging users to use contactless methods, which mobile offered.

69% of retailers saw an increase in contactless payments during the pandemic, and 94% expect that increase to continue over the next 18 months. In-store or proximity mobile payments grew 29% in 2020 as mobile became the preferred method for the times. More than 92 million Americans made at least one mobile payment during a six-month period in 2020.

• Story By: Scarlett Sieber, Forbes

Much as banks might want to get rid of the use of usernames and passwords for online and mobile banking, they still bump up against a harsh reality: Nearly 75% of consumers in a recent study said they use that method when logging in to banking accounts.

But consumers are also warming to stronger authentication methods as they become more exposed to them on their smartphones and other devices. And regulatory pressure, both within the U.S. and in other countries, is gradually pushing banks and other companies to reduce their reliance on usernames and passwords. As a result, the day banks can ditch passwords may be coming sooner than once was thought.

• Story By: Dan Heun, American Banker

The CFPB on Wednesday proposed new requirements for financial institutions to collect and report data on small businesses access to credit in a bid to boost transparency and fair lending.

The proposed rule would require financial institutions report the amount and type of small business credit applied for and extended, demographic information about small business credit applicants, and key elements of the price of the credit offered. The requirements are a long-awaited part of the broader Wall Street reforms in the wake of the 2008 financial crisis. They would apply to a wide range of products, including term loans, lines of credit, credit cards and merchant cash advances.

• Story By: Chris Prentice, Reuters

Point has raised a $46.5 million Series B funding round. The company positions itself as a premium debit card company and tries to offer credit card rewards with debit cards. Opening a Point account currently costs $49 per year. You get two free ATM withdrawals per month and you don’t pay any foreign transaction fees. After that, you can safely spend money with your Point card.

You know that you have enough money to pay for your purchases as it’s a debit card. Point users earn points with every purchase. You get 5x points on subscriptions, such as Spotify and Netflix, 3x points on food deliveries and ridesharing, and 1x points on everything else. If you pay with your Point card, you also get trip cancellation insurance, car rental insurance, global travel assistance, phone insurance and new purchase insurance.

• Story By: Romain Dillet, TechCrunch