This Week In Credit Card News: The Dangers With Apple’s Pay Later; Senate Bill Could Regulate Crypto

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The ugly economics behind Apple’s new pay later system

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Apple is getting into the buy now, pay later business with its new Pay Later service built into Apple Pay and Apple Wallet. While Apple bills the service as “designed with the financial health of users in mind,” BNPL is a practice that has come under scrutiny by government regulators, which could potentially harm customers. Is. Apple’s Pay Later service, which has been in the works since at least last year, lets users make purchases with Apple Pay and then pay it back in four equal installments over the course of six weeks. There is no interest on these installments, but it is unclear whether Apple will charge a late fee, and if so, how much it will cost. [The Verge]

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US Senators Unveil Bill to Regulate Cryptocurrency

A bipartisan pair of US senators unveiled a bill on Tuesday that would set new rules for the cryptocurrency, and hand the bulk of its oversight to the Commodity Futures Trading Commission (CFTC). The bill is one of the most ambitious efforts yet by lawmakers to keep a clear guard rail around the rapidly growing and controversial cryptocurrency markets. The measure would determine whether the CFTC, not the Securities and Exchange Commission, play a primary role in regulating crypto products, most of which act more like commodities than securities, the senators said. The smaller CFTC is generally viewed as a friendly regulator for cryptocurrencies, as the SEC has generally found that crypto products must comply with a number of securities requirements. [Reuters]

1 in 3 Americans earning $250,000 or more say they live paycheck to paycheck

According to a survey by PYMNTS and LendingClub, one in three Americans earning at least $250,000 say they live paycheck to paycheck. To be precise, 36% of Americans taking home a quarter of a million dollars or more claim that they are running out of money again. That’s what more than 40% of those earning at least $100,000 say so. The big picture is bleak. Overall, 61% of Americans were living paycheck to paycheck in April 2022, the report found. In other words, about two-thirds of the US population, or about 157 million people, has nothing left at the end of the month, a nine percentage point increase from April 2021. And the vast majority of people earning less than $50,000 (only less than 80% of them) are living paycheck to paycheck. [MarketWatch]

Satisfaction with credit card apps drops as usage rises

Most customers are unhappy with them credit card mobile app and online options, according to results from recent studies by J.D. Power. Overall satisfaction with most digital channels has declined as usage has increased. Many customers are financially stressed, and want their banks and credit card providers to help them manage their finances through online tools. However, in delivering personalization through high-touch digital channels, most banks and credit card providers are missing the mark. [ABA Banking Journal]

Higher prices as Americans increase credit card use

Americans continue to lean on credit cards and loans, as consumer debt surged by $38 billion in April, amid the highest inflation in 40 years. The latest Federal Reserve data on outstanding consumer debt comes after a record March increase of $52.4 billion. Since then that figure has been reduced to $47.3 billion. Revolving credit, which comprises mostly credit card balances, grew at an annualized rate of 19.6% and totaled $1.103 trillion in April, breaking a pre-pandemic record of $1.1 trillion. [CNN]

Buy-now-pay-later financing can create the ‘dangerous illusion’ that buying is much cheaper than it actually is

According to the latest Banking and Payment Intelligence report from JD Power, buy-now-pay-later, or BNPL, financing options are becoming increasingly popular among consumers, especially those under the age of 45. And it can spell trouble for their financial well being. Many young people report that they don’t understand how these payment methods work, which is where the trouble begins. Signing up for BNPL loans is fairly easy, and if consumers are not careful about their spending, they may end up accumulating more loans than they can repay. In fact, the report found, nearly a third of young consumers say they spend more with BNPL than their budget allows. [Fortune]

The Apple Passkey feature will be our first taste of a truly passwordless future

Apple and other tech giants want to get rid of passwords for online accounts and apps. During its WWDC 2022 keynote on Monday, the iPhone maker announced a new feature called Passkey. It is essentially a new type of security that seeks to replace passwords for account login purposes. It will debut in the fall on iOS 16, macOS Ventura, and Apple’s other 2022 updates. Apple Passkey is essentially a type of biometric sign-in standard. Instead of typing in a password to log into an app or online account, you’ll use a passkey stored on your device. You can think of a passkey as a digital version of something like a hardware security key. Once you’ve set up a passkey on an account, you’ll be able to use it to log in by authenticating with Face ID or Touch ID. [Apple Insider]

Mastercard Launches Open Banking Feature ‘Pay By Link’

MasterCard introduced its Pay by Link payment feature in Money 20/20 Europe, which leaned on European open banking platform Aia to allow businesses to send a link to their customers so they can make payments instantly from anywhere . The company’s press release states that the new payments “feature a new era of choice, simplicity and personalization in a safe and secure way directly from MasterCard’s open banking vision.” Based on open banking payments, MasterCard’s Pay Buy Link feature offers users dealing with accounting, insurance and telecommunications companies as well as social commerce, payment service providers and utility firms. [PYMNTS]

Discover Offers a free and simple way to opt-out of popular people-search websites

Discover recently launched a new benefit for its credit card and bank customers. It says its “online privacy protection” program makes it easy to extract personal information from 10 popular data-collection websites, including Spokeo, Intelius and Zabasearch. The free service is accessed through the Discover mobile app. For those who need to protect their personal information, such as domestic abuse survivors, opting out of this data sharing is important. Deleting your information from people-search sites may reduce your risk of identity theft, but it won’t eliminate the threat, something Discover clarifies to customers who sign up for its program. [Consumers’ Checkbook]

Evella is the Latest FinTech Focused on Couples Banking with a Twist

Evella, a new fintech start-up, was born out of the hope that couples would just use Venmo until they were married. The best solution, by far, has been joint accounts: which means two people will set up an account where they connect to their accounts and exit from the same pool. Instead, Evela wants to create a split account: Couples maintain separate accounts and balances, but get an Evela debit card linked to both of those accounts. [Tech Crunch]

Yes, a restaurant may charge different prices for credit card and cash

In each state, it is legal for restaurants to charge customers more for credit card purchases than for purchases made with cash. In most states, they can accomplish this with an additional fee for credit card purchases. In some states, restaurants may do this by offering discounts for purchases made with cash or other payment methods only. Although the cash discount serves the same purpose as the surcharge, the cash discount is also legal in the 10 states that forbid the surcharge. [Verify]

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