Dec. 30, 2010
More consumers are making online purchases with PayPal, according to a recent report. New York City-based Auriemma Consulting Group (AGC) found that 76 percent of U.S. consumers have an active PayPal account, up from 55 percent when the company last conducted a similar survey in 2008. In addition to the increase in PayPal account holders, AGC also found a shift in consumers’ comfort level with providing bank information online, a potentially troubling trend for companies in the payment card industry, according to Patricia Sahm, managing director at ACG. “We’re seeing substantial gains in consumer willingness to provide their bank account information to PayPal,” Sahm said. “Where Visa and MasterCard formerly had a complementary relationship with PayPal when consumers used their credit cards to fund their PayPal account, the credit card networks are cut out of the exchange when PayPal is positioned like a debit card linked directly to the checking account.” In the 2008 survey, 45 percent of respondents said that they were “uncomfortable” with the idea of providing bank account information to an Internet-based payment company like PayPal; in the most recent 2010 study that percentage had fallen to 31 percent.
Dec. 30, 2010
After achieving solid growth to kick off the holiday shopping season, gift card sales reversed course in December. In the first two weeks of the month, dollar volume loaded on closed-loop gift cards fell 0.3 percent compared with the same period in 2009 after growing 8.6 percent year-over-year in November, according to First Data SpendTrend analysis released shortly before Christmas. Redemptions grew slightly this month compared to last year (3.9 percent) but at a slower rate than November (5.9 percent). For some categories, however, the news was bright—especially in the foodservice industry. The dollar volume loaded on gift cards at casual dining and quick serve restaurants in December’s first two weeks grew 18 percent and 10.7 percent, respectively, after posting year-over-year growth of 16.5 percent and 8.1 percent in November.
Dec. 30, 2010
Since mid-December, SWAGG—a mobile gift card application that enables consumers to buy, exchange, redeem and manage gift, loyalty and membership cards and receive and redeem targeted promotions—has added several high-profile retailers that will make their gift cards available on mobile devices. Formerly offered by mobile technology company Qualcomm’s mobile banking subsidiary Firethorn Holdings, the SWAGG platform is now under the control of a newly created subsidiary called Outlier Inc. In the past two weeks Outlier announced partnerships with JCPenney, Steve Madden shoes and Live Nation, the entertainment company behind concert, theater and sports ticket Website Ticketmaster.com. As consumers become more comfortable with the capabilities of smartphones, retailers are looking for more ways to deliver value via the devices, according to Tom Nealon, group executive vice president of JCPenney. “Customers are increasingly turning to mobile experiences to assist with their shopping needs,” said Nealon. “Using the SWAGG application, members of our JCP Rewards customer loyalty program will be able to view their account directly from their mobile device, allowing them to conveniently check their points and access their $10 monthly reward coupon on the go.”
Dec. 28, 2010
Last Thursday, as Rep. Barney Frank was urging the Fed to take some bite out of the proposed interchange rules resulting from the Durbin Amendment to the financial reform bill passed last spring (Paybefore Dec. 23, 2010), the amendment’s architect turned his attention to prepaid cards. Sen. Dick Durbin (D-Ill.), in a letter to Elizabeth Warren—President Obama’s choice to get the newly created Consumer Financial Protection Bureau up and running—asked the CFPB to “closely monitor the marketing, fees and terms of these products and to alert businesses and consumers about deceptive and abusive products.” Durbin communicated in his letter that he feels banks, faced with reductions in interchange revenue that would result from the rules proposed by the Fed, will try to make up the shortfall, in part, by “steering their customers away from traditional debit cards and toward less-regulated products, including reloadable prepaid debit cards.” Sen. Durbin’s letter to Warren echoes one written by his Senate colleague, Robert Menendez (D-N.J), soliciting the CFPB’s support in a renewed attempt to impose additional regulation controlling network branded prepaid cards (Paybefore December 2010). Sen. Durbin has signed on as a co-sponsor of Sen. Menendez’s Prepaid Card Consumer Protection Act of 2010, which would ban fees on balance inquiry, overdraft, inactivity and account closure, among others, as well as extend the full consumer protections of Reg E to network branded reloadable prepaid cards. The measure, if enacted, would require the CFPB and the FDIC to issue regulations within nine months.
Dec. 28, 2010
Blackhawk Network’s Gift Card Mall, which recently launched on the giant auction Website eBay (Paybefore Dec. 16, 2010), continued its online assault with a pre-Christmas announcement that it has launched a Facebook application. The new service enables consumers to send gift cards almost instantly through the popular social networking Website. The Gift Card Mall Facebook application includes a group gifting feature through which Facebook friends can contribute as a group to a single gift card for one person. “As gift cards continue to be one of the most popular gifts to give, we are continuing to introduce new gift card technology and products that enhance consumers’ experiences when it comes to gift giving,” said Talbott Roche, president, Blackhawk Network. “We’ve seen a rising demand from consumers to use online channels, such as our GiftCardMall.com, and social networks to send gifts, and it was an obvious choice to offer a seamless way for consumers to give gift cards from their favorite brands on Facebook. The Facebook application gives users the value and convenience they desire when sending and receiving gifts.”