Today in the payments news roundup, average interest rates on credit cards are approaching record levels. Also, the rollout of WhatsApp Pay in India may be held back by data processing regulations. And the Libra Association’s member firms are slated to meet on Monday (Oct. 14) in Switzerland.
Libra Association member firms, which now number 27 companies, are slated to meet on Monday (Oct. 14) in Switzerland. There’s an agenda behind the meeting, where the companies will appoint a board of directors. The founding members are supposed to pay $10 million each to back the digital currency project, and in doing so, commit to Libra operations.
Average interest rates on credit cards are coming close to record levels despite a 50-basis-point decline on a 10-year note yield. The U.S. prime lending rate is now reportedly at almost its lowest level ever because of Federal Reserve monetary policy.
But the distance between an average annualized rate and a prime rate on credit cards is getting larger. At the end of August, it was almost at its biggest amount ever. Many credit card issuers have reportedly been trying to attract new business with rewards in place of lowering rates.
Federal Reserve officials are concerned that slowing global growth, which is reportedly made worse by the trade war between the U.S. and China, could sap economic activity as well as domestic hiring and trigger a recession. Surveys and other economic data have hinted that weakness in manufacturing might be spreading into other parts of the economy in the U.S. like the services sector.
WhatsApp Pay India’s rollout may experience a delay, as compliance issues tied to data processing regulations may keep the service from fully launching by the close of 2019 (as had been projected). Facebook owns WhatsApp, and the messaging service has over 450 million users in India.
Money laundering may not be a new problem for financial institutions (FIs), but the scale of it is. Banks need to address the security weaknesses inherent in their online platforms that could become ports of entry for fraudsters, according to Synchrony Financial Executive Vice President and Chief Customer Engagement Officer Michael Bopp. However, he also noted that they need to plug those gaps without alienating legitimate customers.
LendingClub Founder Renaud Laplanche built a business to help consumers manage the $800 million in outstanding credit card debt 12 years ago with an unsecured personal loan that consolidated the debt into a lower interest option with fixed monthly payments. Through the launch of the Upgrade Card that is issued by the Upgrade consumer credit platform started by Laplanche in 2017, the founder has set his sights on disrupting the industry that LendingClub disrupted over a decade ago.
While the Upgrade Card is tied to a line of credit that can be used everywhere that Visa cards are accepted, it turns outstanding balances at the end of each month into installment payments. And consumers receive rewards for making payments — instead of spending — with 1 percent for each one made. Interest rates on the Upgrade Card run from 6.49 percent APR to 29.99 percent APR.