Data Dive

Interesting Answers Edition: Wells Fargo, EMV And Millennial Card Usage

There were more questions than answers in the news last week.

Are Hillary Clinton and Donald Trump each healthy enough to be president? Who planted the bomb in Manhattan on Saturday night (Sept. 17)? Usually, question marks in headlines are a way to capture audience interest; last week, they were more a sign of genuine uncertainty on the part of the people reporting the news.

As the week moved on, some of those questions got answers, even if they were vague and not very reassuring.

But for those with a taste for answers, as opposed to open-ended speculation, payments and commerce probably would have been a better bet for news reading, as we learned all kinds of new and exciting things about the ecosystem.

For example, what happens to the CEO of a big bank that gets caught red-handed engaging in consumer fraud? Say you’re sorry — or sorry-ish — and then prepare for a long afternoon with Sen. Elizabeth Warren. Has EMV done anything useful in the year or so since the liability shift went into effect? Yes. With an asterisk or two. Will anything ever excite millennials about credit cards? Yes, flexible rewards points and a high annual fee.

Ready for the full story?


Wells CEO Will Stick Around For The Fallout

There are bad days, and there are bad days.

Wells Fargo — faced with $185 million in fines from the CFPB and the Office of the Comptroller of Currency over the public revelation of the fraudulent creation of over 2 million accounts — has arguably won the award for worst day at a bank in 2016.

Some CEOs would resign in the face of such revelations, but Wells Fargo CEO John Stumpf said he intends to keep his position at the helm of the company.

“I think the best thing I could do right now is lead this company and lead this company forward,” Stumpf noted during a CNBC appearance.

We’ll soon see if his board and activist investors feel the same way.

In the category of how much weirder can a story get, Wells has announced that roughly 5,300 Wells Fargo employees were fired over the course of several years, suggesting that (a) it knew this bad behavior was happening and (b) did nothing to stop it for years. On Tuesday (Sept. 13), the firm said it had removed product sales requirements for its workers but only because they had to.

“To the extent that we don’t get it right 100 percent of the time, because that is our goal, if we don’t make that plan, I am responsible. I am accountable. Anybody else in the company, we all feel, when we fall short of that plan, we feel accountable and responsible. And we are taking action.”

So, to sum up, Stumpf feels generally responsible for not “being at 100 percent” but not specifically responsible for the 2 million times Wells Fargo employees responded to the firm’s incentive structure by breaking the law.

Stumpf, however, does have a long week ahead of him on Capitol Hill. Members of the Senate Banking Committee are slated to meet with officials from Wells Fargo on Sept. 20.

In advance of that meeting, Stumpf has already started to get some nasty-grams from the Senate.

Led by consumer protection advocate Sen. Elizabeth Warren (D-MA), a group of Democratic senators has asked Wells’ chairman and CEO whether or not the bank intends to take some of that compensation back from executives and managers who allegedly supported the opening of those 2 million fraudulent accounts. Specifically, the lawmakers referred to Carrie Tolstedt, who led the unit where the alleged misconduct occurred.

“We write to ask whether the board of directors will invoke Wells Fargo’s clawback authority to recover any of the compensation the company has provided to its senior executives, including Carrie Tolstedt,” they wrote. “There appear to be multiple grounds on which to trigger the clawback provisions to recoup some or all of Ms. Tolstedt’s incentive rewards.”

The letter writers requested a response by today (Sept. 19), in advance of tomorrow’s official congressional grilling. Warren has also questioned — in a variety of media sources — whether or not Stumpf should be allowed to keep his job.

In broader implications for the Wells meltdown, congressional Republicans in the House had been attempting to legislatively scale back Dodd-Frank and the CFPB’s power. The recent revelations about Wells have likely made that action politically untenable for the foreseeable future.

And here’s a big question: What does Mr. Buffett think about all of this? He’s been silent, even though the actions over at Wells cost him some $1.4 billion. Buffett and Berkshire own a ton of Wells stock, and he just upped their position back in the summer. Which leads us to another question: Why?


EMV’s Win — Against Cloned-Card Fraud

EMV has been in the U.S. market coming up now on almost a full year. The run-up to the Oct. 1 liability shift was bumpy and somewhat contentious, but with most of the early adoption hurdles cleared at least, data is starting to come in on its effects.

With good news to report, according to Mastercard.

Just about a year into the move to chip-enabled cards, Mastercard reported that the data shows a “positive impact” through the technology across stakeholders, including issuing banks, consumers and merchants.

Counterfeit fraud costs at retailers who have either completed or are close to completing EMV transitions are down 54 percent year over year. Conversely, counterfeit fraud costs were up 77 percent year over year among larger merchants who have not yet completed, or who have not yet even adopted, EMV transitions.

Cards are also becoming an increasingly ubiquitous part of consumers’ lives. As of July of this year, 88 percent of Mastercard’s U.S.-based consumer credit cards are chip cards, a tally that represents a 105 percent boost in chip card adoption since the liability shift took root on Oct. 1 of last year.

Merchant acceptance is also doing better on the smaller, Main Street merchant front, too. According to Mastercard, of 2 million chip-active merchant locations in its network, around 1.3 million are regional and local locations, up 159 percent since the liability shift.

In addition, the firm stated that nine in 10 Americans said they commonly use chip cards, which is a 38 percentage-point jump year over year into 2016, from 49 percent to 87 percent over that timeframe.

So, with all the happy numbers, why the asterisk instead of party hats?

Well, EMV card-cloning fraud has gone down, but we would be remiss in a Data Dive if we didn’t point out that fraud attempts online have done anything but that. In fact, in general, online fraud attempts have spiked 137 percent over the last four quarters, according to the latest PYMNTS/Forter Global Fraud Attack Index.

As it turns out, EVM didn’t so much inspire anyone to give up their life of crime as it inspired them to move their fraud attempts online.


How To Win Millennials With Cards

Millennials have gained something of a reputation for being a credit-shy generation. Burdened with student debt and a weak economy, this is a generation who reportedly eschews credit cards and mortgages as a cohort.

At least, that has been the conventional wisdom, but it seems that some cards — Chase’s Sapphire Reserve in particular — are finding ways to break through.

The card has proven to be so virally popular that the issuer ran out of the fancy metallic stock the card is made from, forcing some disappointed users to live with plastic temporary cards for a few weeks. Happy customers, on the other hand, are literally flooding YouTube with breathlessly excited unboxing videos.

Like many premium cards with rich rewards, the price per annum for these cards is steep — $450 – the same as the Amex Platinum Card. But ground once trodden by only a handful of issuers — most notably, American Express — has now become more open to players hoping to compete for the spendier customers more likely to whip out the plastic to pay for travel and dining experiences.

“American Express used to have a stranglehold on the high-end market, but folks like Chase and Citi are coming hard after their crown,” said Matt Schulz, an analyst for, a comparison site. “It’s the best time in years to shop for a rewards card.”

The Sapphire card offers similar benefits to an Amex Platinum — free hotel stays, access to airport lounges, transferable points redeemable for airfares and upgrades, as well as spending incentives to let customers cash in faster.

Chase has aggressively pushed the card with a 100,000-points bonus for singing on — more than twice most of its competitors.

“It significantly exceeded our expectations,” Amy Bonitatibus, a spokeswoman for Chase, said of the “tens of thousands” of cards the bank has issued so far, noting also that the product has been a particular hit among the hard-to-court millennials.


So, what did we learn this week? Millennials will use — and even love — an expensive credit card, as long as they get a lot for taking it on (and shiny card stock apparently also helps.) EMV is locking the counterfeit card door, so thieves are heading to the windows online. And Wells Fargo’s CEO is bravely sticking it out at the helm of his rather embattled ship; we’ll see soon if his board and investors think he should be told to get off.

Until next Monday…



The PYMNTS Cross-Border Merchant Friction Index analyzes the key friction points experienced by consumers browsing, shopping and paying for purchases on international eCommerce sites. PYMNTS examined the checkout processes of 266 B2B and B2C eCommerce sites across 12 industries and operating from locations across Europe and the United States to provide a comprehensive overview of their checkout offerings.

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