Data Dive

Labor Day Edition — American Express, Pizza Wars And Wells Fargo

Today, nationwide, Americans are celebrating the joys of hard work and earning an honest day’s living by sleeping late, going one last time to the beach and soaking up the last of the 75 percent off Labor Day sales instead of going to work. It’s good to take one day a year to remind ourselves that perhaps the greatest joy of hard work is not working hard every now and then.

But payments and commerce never sleep or take a day off. And if the malls are open, then so are we — and ready to dive into the data you need, because the work week will go on — starting Tuesday. With that in mind, American Express is moving in on the cost-conscious, the pizza wars are heating up and Wells Fargo’s CEO is making good on his promise that the news about them will only get worse.

Amex’s New Groove

American Express has the reputation of being the card for the affluent customer who’s less concerned about how much they spend than what they’re using it to buy — the ultimate expression of this being the Centurion Card (Black Card) and the various ridiculous purchases it has enabled over the years.

But American Express is now out to woo the more budget-conscious with a feature that will allow customers to separate big purchases — like furniture, medical expenses, airplane tickets or weddings — from smaller, everyday items like cups of coffee, and even to pay immediately for small purchases from their bank accounts (aka just like the debit products they don’t have).

The new option essentially allows cardholders to decide what purchases merit interest payments so that they can better manage their budgets in real time, said Jeff Chwast, head of Global Lending New Products and Capabilities at American Express.

As many as ten purchases of $100 (or more) each can be placed into installment plans. For example, a $1,000 purchase could be covered in six monthly installments of $172.18. This would cost an additional $33.06, or $5.51 a month, in finance fees — virtually the same as the company would charge in interest for a revolving balance on the account.

Other monthly credit card spending would be interest-free as long the cardholder pays in full by the due date.

“You’ll know exactly how much you’ll be charged before you set up the plan, which is very different than a normal credit card revolve feature,” Jeff Chwast said.

Card ownership, overall, for consumers under 35 has dipped in the U.S. to the lowest point since 1989, when the Federal Reserve started collecting data on credit card ownership.

As a result, big banks such as JPMorgan Chase and Citigroup have been enhancing rewards for their more affluent-targeted cards, which took a bite from Amex’s market share.

Amex still has more spending on its credit cards than any other U.S. issuer, but its market share fell from the prior year. It also slipped in outstanding balances, ranking fourth last year with 10.7 percent.

American Express is hoping the new features will lead more customers to use its cards and thereby increase company revenue, Chwast said.

“We believe customers will be taking out their American Express card to pay, rather than other cards,” Chwast said.

Speaking of getting competitive...

Pizza Bots Vs. Pizza Points

The pizza wars are upon us, marked by slingers of pepperoni trying to one-up each other on the road to marinara-mozzarella dominance.

The opening salvo was shot by Domino’s this week, with its announcement that it would be sending its pizzas to customers’ homes via driverless cars. According to reports, Domino’s and Ford will be testing self-driving pizza delivery cars this fall in Michigan to take the temperature on automated delivery. Well, sort of driverless. At least as part of the test, a driver will go along for the ride.

One cannot opt out of automated pizza delivery; it will choose you. Driverless pizzas delivery will go to randomly selected customers in the Ann Arbor Area. The delivery vehicle of choice will be a self-driving Ford Fusion.

And, so far, that ride has some limits: The delivery vehicles can only make a curbside delivery, so those who live in 3rd floor dorm rooms or 5th floor walk-ups will need to come down to greet the car. Domino’s hopes to solve that last problem but notes it won’t be easy.

“We’re still focused on the last 50 feet,” said Domino’s spokeswoman Jenny Fouracre. “That’s a big challenge — getting (the pizza) from the curb to the door.”

Which seems hard without a driver.

Speaking of challenges, Pizza Hut has one for its fans, and meeting it could mean a lifetime of free Pizza Hut snacking.

Pizza Hut launched its rewards program last week, which offers fans two points for every $1 spent and a chance to access prizes, free pizza and special discounts, all fairly standard rewards territory.

Less standard was employing master domino artist (yes, that is a thing) Lily Hevesh as the lead designer and architect on a project to construct a series of pizza-themed murals. The project reportedly took five days and incorporated  catapults, domino “walls” and 250 pizza boxes and a team of 12 other master domino builders (yes, there are that many domino master builders on planet Earth; we were surprised too).

Pizza Hut then toppled all those dominos, because they are not even a little bit subtle about fighting a pizza war, an act that took five full minutes to complete.

Want to win free pizza for life? No problem. Join rewards program and correctly guess how many dominos they had to topple to get to that result. Our guess, for the record, is 11,629 — as that is the exact number of Domino’s pizza franchises on the planet Earth. If you use it to win all the pizza, please send us a slice. (We like ours with sausage and pepperoni).

We deeply look forward to whatever passive aggressive sight gags Papa John’s and Little Caesars come up with.

Well Fargo Is in Trouble (Surprise!)

Looks like Wells Fargo has found yet another group of consumers to get disgruntled. A Nevada homeowner has filed a suit that alleges the bank  improperly forced thousands of U.S. customers to lock in home interest rates when their mortgage applications were delayed.

Victor Muniz accused the bank of charging him $287.50 for a rate lock extension this year after his mortgage application was hit with bank delays. Muniz was initially told Wells Fargo would pay to extend the home interest rate lock, but it seems a regional manager reversed that decision.

The class action lawsuit — filed last week in federal court — further alleges that the bank had managers pressure employees to blame homeowners for the delays by falsely stating that paperwork was missing, so homeowners could be stuck with extra fees.

While the bank usually locked in home interest rates for 30 to 90 days, it often took longer than that to process applications due to understaffing. Fees would then amount to between 0.125 percent to 0.25 percent of the loan amount, the suit said.

The suit alleges that, by doing so, Wells Fargo essentially ignored state and federal consumer protection laws, including the U.S. Real Estate Settlement Procedures Act and the U.S. Truth in Lending Act.

Wells Fargo spokesman Tom Goyda said the bank is reviewing past practices on rate lock extensions and will take appropriate steps for affected customers.

That lawsuit follows news last month that the CFPB is investigating the fees Wells Fargo charged customers to lock in interest rates for delayed mortgage loans, and that the bank was working with regulators to see if customers had been harmed by the fees.

The Wells Fargo lawsuit, which will request the court grant class action status, comes as the bank is trying to recover from last year’s scandal, when it was discovered that employees had opened a slew of fake accounts in the retail banking units. The original count for those fake accounts was 2.1 million, but further third-party review that also hit the news wires this week discovered an additional 1.4 million accounts, which brings the total to 3.5 million fraudulently created accounts.

“The original account analysis reviewed 93.5 million current and former customer accounts opened in an approximately four-and-half-year time period — from May 2011 through mid-2015 — and identified approximately 2.1 million potentially unauthorized accounts. The expanded analysis reviewed more than 165 million retail banking accounts opened over a nearly eight-year period — from Jan. 2009 through Sept. 2016 — and identified a new total of approximately 3.5 million potentially unauthorized consumer and small business accounts,” Wells Fargo noted in the press release.

In addition, the bank has also recently been accused of forcing unnecessary and unwanted insurance on auto loan customers, as well as closing accounts that customers needed.

So, what did we learn this week?

Necessity is the mother of credit card innovation, pizza is a deceptively cutthroat world and this was definitely not the summer of love for Wells Fargo.

Happy Labor Day!



About: Accelerating The Real-Time Payments Demand Curve:What Banks Need To Know About What Consumers Want And Need, PYMNTS  examines consumers’ understanding of real-time payments and the methods they use for different types of payments. The report explores consumers’ interest in real-time payments and their willingness to switch to financial institutions that offer such capabilities.