This Week In Credit Card News: Companies Ramp Up Tracking Your Transaction Data; Paypal Use Soars

Credit Card Companies Are Tracking Shoppers Like Never Before

Transactions have given rise to a complex data-selling ecosystem. At the heart of it are credit card processing networks, including Visa
V
, American Express
AXP
, and Mastercard
MA
, the latter of which took in $4.1 billion in 2019—a quarter of its annual revenue—from leveraging its warehouse of transaction data for services that include marketing analytics as well as reward programs and fraud detection. And then there are the banks, retailers, payment processors, and software companies that empower online transactions. Few disclose their methods; some actively obfuscate their work; all vow that personal data is anonymized and aggregated, and therefore secure. [Fast Company]

PayPal Processed More Transactions on May 1 Than on Black Friday

On May 1, PayPal experienced the largest single day of transactions in the company’s history, bigger than both Black Friday and Cyber Monday of 2019. April 2020 was also a record-breaking month for PayPal in terms of enrollment and use. PayPal added 7.4 million net new active accounts. PayPal also hit a record in Q1,adding 10 million net new accounts, though that pick-up was rapidly outshined in April, when its daily net new customer rate averaged roughly 250,000 per day and counting. [PYMNTS]

More Americans Using Credit Cards Than Cash for Food

More Americans are relying on credit cards to buy essentials, like groceries, and conserving cash as the unemployment rate skyrockets as a result of the coronavirus pandemic. Overall credit card spending fell 40% during March and early April with more Americans at home during the coronavirus, a new report by JP Morgan
JPM
Chase suggests. Despite less credit card spending, consumers are choosing to pay for smaller budget items like food with credit versus cash, other data suggests.  [Fox Business]

Credit Card Issuers Tighten Standards Amid Covid-19 Uncertainty

A report from the Consumer Financial Protection Bureau indicates that credit card applications dropped drastically after Covid-19 came to the U.S. In the second week of March 2020, there was already a 6.8% drop in hard inquiries for revolving credit cards. That jumped to a 39.7% decline by the end of the month. Consumers became leery about the stability of their personal finances, thus reducing the desire to get a new credit card. Card issuers have also pulled back on their marketing efforts, focusing on their existing customers, rather than acquiring new ones. [LowCards.com]

JP Morgan’s U.S. Credit Card Holders Spent 40% Less Due to Coronavirus

Credit card spending among some of Chase’s U.S. customers fell 40% during March and early April compared to last year, as Americans stayed home to protect against the novel coronavirus. Spending on non-essential goods and services, like retail, restaurants, and entertainment, fell sharply across income brackets accounting for nearly all of the drop in spending during that period. [Reuters]

Prepaid Cards’ Dark Underbelly Hides Potential Financial Sector Pain

Prepaid debit cards have paved the way to cashless shopping and fast, digital transactions for millions of people across the world. But there is a dark side. Issued by major banks and others, and running on the networks of payments giants like Visa and Mastercard, these prepaid cards are used to launder the proceeds of crime or fund terrorist plots. Victims of scams are pressured into handing over hundreds or thousands of dollars through gift cards from iTunes and Google Play. And there is a growing range of reloadable debit cards that allow holders of bitcoin and other cryptocurrencies to spend their funds in the real economy, with no real way of knowing whether those funds are the proceeds of illicit activity. [S&P Global]

Mastercard Says New Data Show Spending Headed Toward Normalization Phase

New network data from Mastercard show U.S. switched volume is off 6% year-over-year for the week ending May 7 compared with a 26% decline in the week ending April 30. After several months of declines in consumer and business spending due to governmental lockdown orders worldwide to control the Covid-19 pandemic, Mastercard now says the economy may be moving from what it calls “stabilization” toward “normalization” as restrictions gradually ease in many places. [Digital Transactions]

Big Banks Built a $35 Billion Fortress to Protect Against Coronavirus Bankruptcies and Defaults

Officials in Washington are trying hard to minimize the amount of bankruptcies, defaults and foreclosures caused by the coronavirus pandemic. America’s big banks are planning for the worst anyway. Bank of America
BAC
, JPMorgan Chase, Citigroup
C
, Wells Fargo
WFC
and US Bancorp
USB
 have set aside an additional $35 billion during the first quarter to cushion against loans that go bust, according to a tally by Edward Jones. That unprecedented sum underscores the magnitude of the economic shock, vast uncertainty over the shape of a recovery and a new accounting standard that requires banks to project losses over the life of loans. [CNN Business]

Discover Extends EMV Liability Date for Gas Stations until April

Discover is extending its EMV fraud liability date, for automated fuel dispensers, for six months from Oct. 16 this year until April 16, 2021. The strategy is to provide some relief to merchants due to the COVID-19 pandemic. The move follows similar actions announced by American Express and Visa earlier this month. Fuel merchants had requested an extension on the deadline to upgrade payment systems due to the financial impact of the pandemic. [Mobile Payments Today]

Divorce Can Cause Your Credit Score to Plummet. Take These 4 Steps Beforehand

There are many emotional decisions to navigate when preparing for a divorce, but one of the first things you’ll want to pay close attention to is your credit. According to a 2019 survey by Debt.com with Moneywise.com, 38% of respondents reported that they saw their credit score drop by more than 50 points after separating from their partner. [CNBC]

Will Coronavirus Hardship Assistance Programs Hurt My Credit?

Millions of Americans are struggling to pay their bills after they were unexpectedly forced out of work by the COVID-19 pandemic. Banks, credit card issuers, and service providers have stepped up to offer unprecedented levels of aid. One of the biggest questions is whether enrolling in one of these programs will negatively affect your credit. The answer is no — not directly, at least. [The Motley Fool]

Visa Signs Up 28 New Partners for Payment Token Service

Visa is pushing deeper into the ever-growing digital payments sphere by signing up a raft of global players in that segment to be part of its Visa Token Service. Visa announced it had added 28 partners for the service, including prominent Russian internet company Yandex
YNDX
’s  Yandex.Money and other international “gateway” payment service providers. [The Motley Fool]