Your Friday fix for global fintech and payments news
The US banking industry has undergone drastic changes this week, as US cardholders have seen their credit card limits reduced, and banking accounts closed without prior warning. In other news, the US also sees a proliferation in growth of its cashless payments market, and Visa add 28 new partners to its Visa Token Service.
Our weekly round-up brings you a dose of some of the biggest news announcements from the past seven days so you can keep an eye on all that’s shaping our world this week.
- Credit card issuers lower cardholder limits, close accounts
- New payment methods will help drive cashless payments over the coming years
- Visa Token service gains 28 new partners
Could your bank account be closed without warning? A daunting proposition for many has unfortunately become reality as a new survey reveals that 25% of US cardholders have had their limits reduced or accounts closed within the past 30 days.
According to the survey, conducted by CompareCards in late April this year, nearly 50 million people have seen their credit limits decreased, or even had their cards closed involuntarily. Meanwhile, Discover has recently announced plans to slow down the opening of new accounts, as it expects financial setbacks with cardholders asking to skip payments. Such developments are particularly pressing with 47% of US adults carrying a balance on their credit card accounts in April, and increased credit card usage since the COVID-19 pandemic began.
RBR report that cashless payments will see a huge uptick in the coming years, with new payment methods driving the trend. With increases in financial inclusion efforts, the welcome adoption of mobile and contactless payments, and the introduction of new payment systems around the world, cashless payments are experiencing meteoric growth. According to RBR’s study, Global Payment Cards Data and Forecasts to 2024, cashless payments grew by 18% to reach 784 billion in 2018 – and this figure has risen year-on-year since. Payment cards accounted for 57% of all cashless payments, with credit transfers coming in at 31%. Cheques continue to fall out of favour with the general public sitting at just 3% of total cashless payments.
Daniel Dawson, leader of RBR’s Global Payment Cards Data and Forecasts to 2024 research, said: “With increasing digitalisation and more people entering the formal banking system, there is still plenty of potential for cashless payments. The shift away from cash is likely to continue over the coming years as e-commerce rises and consumers opt for convenient alternative payment methods”.
Visa has announced that 28 new partners will join Visa Token Service as credential-on-file (COF) token requestors. As new partners of Visa’s Token Service, they will bring an additional layer of security to those using their services as the tokenise both one-time and recurring payments made with Visa credentials. Tokenisation replaces a cardholder’s 16-digit Visa account number with a token that only Visa can unlock, protecting the underlying card number from fraudsters. Visa have added more than 150 token requestor partners to Visa Token Service in the last five years alone.
Ansar Ansar, Senior Vice President of Digital Payment Products at Visa, said: “Consumers are shifting more rapidly than ever to digital-first commerce, no matter what they’re buying, and tokenization is one of the most effective tools Visa uses to fight fraud and improve the digital payment experience. We’ve seen a fraud reduction rate of 26% for digital transactions processed through Visa Token Service compared to traditional online card transactions. That’s impressive, and these new partners will only add to the momentum.”