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Robin Sidel reports for the Wall St. Journal on MasterCard's plan for an initial public offering early next year.
Analysts and consultants were scrambling yesterday to calculate a potential valuation for MasterCard. Craig Maurer, an analyst at Fulcrum Global Partners in New York, estimated MasterCard in its entirety could be valued at $7 billion, or just under 2.5 times projected revenue for 2005.» Continue Reading
Carrick Mollenkamp reports for the Wall St. Journal on a lawsuit recently filed in federal court in New York City alleging credit card companies held secret meetings where they colluded to promote arbitration.
MasterCard today announced plans for a "new corporate governance and open ownership structure that will include the appointment of a new board of directors comprised of a majority of independent directors, the establishment of a charitable foundation and a transition to being a publicly traded company." » Continue Reading
The Smart Card Alliance has announced the formation of a Contactless Payments Council to facilitate the adoption of contactless payments in the U.S. through education programs for consumers, merchants and issuers. » Continue Reading
Chase has announced it has entered into an agreement to purchase the credit card operation of Sears Canada including both its private-label Sears credit card accounts and its co-branded Sears MasterCard® accounts. The credit card operation includes approximately 10 million accounts and CAD$2.5 billion in outstandings.
"This purchase offers many opportunities for Chase, including partnering with another of the world's leading brands, expanding our private-label business and entering a new and exciting market in Canada," said William I. Campbell, Chairman, Chase Card Services. "We look forward to working closely with Sears Canada and its employees to offer great products and services that consumers find valuable."
Andrew Brown reports for the Wall St. Journal on China's credit card industry.
An industry survey by McKinsey, which hasn't yet been released to clients, backed up optimism about the market, which is still in its infancy but growing exponentially. The report estimates more than 12 million credit cards have been issued in China, up from three million in mid-2003. (There are also hundreds of millions of debit cards that don't offer credit.)
American Express has announced a new Membership Rewards program benefit allowing cardmembers to use Membership Rewards points to book travel directly on the American Express travel website without blackout dates or restrictions for airlines, hotels or cruises. » Continue Reading
Chase and United United have announced that the United Mileage Plus Visa* card is the first airline rewards card to feature "contactless" technology called "blink." The United Mileage Plus Visa cards with blink were first issued this summer to over 200,000 cardmembers in Colorado.
"With blink technology we're giving our United Mileage Plus cardmembers yet another way to enjoy the power and versatility of this extraordinary card," said Joe Venuti, senior vice president for Chase's Card Services division."We're confident the idea will take flight with our cardmembers, who will enjoy gliding through check out lines while accruing mileage earning benefits."
Monee Fields-White reports for Bloomberg on American Express' relationship with MBNA to issue co-branded Amex cards and whether that relationship will continue after Bank of America's acquisition of MBNA.
MBNA and Bank of America officials have yet to say whether the American Express partnership will continue after Bank of America completes its buyout in late 2005 or early 2006.
Michael Copeland writes for Business 2.0 in its September issue about venture capitalists looking to fund new companies in particular market segments. At the top of the list is John Occhipinti of the Woodside Fund who says he wants to fund a company providing "fraudproof credit card authorization via cell phones and PDA's".
Another request comes from Ryan Floyd of Storm Ventures who's looking for "a clever resurrection of the smart-card concept: a software platform for cell phones that allows consumers to make purchases or open doors by waving their phones in front of tiny infrared or RFID readers."
If other VCs are looking for people to pursue specific opportunities in the payments arena, contact us at Glenbrook and we'll be happy to post an item here.
Accenture has published a study on the use of smart card technology in public transportation (PDF).
Smart cards are the ticket to the future for most of the world’s transit operators. According to Accenture’s global research, some implementations have been successful, and many have achieved their original objectives. But smart card implementation was viewed by many respondents as being more complicated than originally anticipated: many viewed e-ticketing solely as a means of systems imple- mentation. This limited view increases the risk of a difficult implementation and limits the ultimate benefit to passengers.Although not specifically mentioned in the study, one of the things that's particularly interesting about the requirements for payments in the transit environment is the need for very fast (< 100 ms) response times between the turnstile and the card to ensure delays and queuing don't occur.
The BBC reports on a study conducted by Mike Bond, Steven Murdoch, and Jolyon Clulow of the security group at the Cambridge University computer lab regarding the security of PIN numbers mailed to customers in so-called PIN mailers.
Thuy-Doan Le reports for the Sacramento Bee on how bounced checks are still costly for small businesses.
About $5.5 billion worth of check fraud attempts were made in the United States in 2003, according to the most recent numbers from the American Bankers Association. The numbers include both counterfeit checks and those written without sufficient funds.
Seung Hwa Hong reports for the Seattle Times on new contactless card technologies.
"There are many, many people interested in this concept," said Carl Stauffenenger, senior vice president of product management for Key consumer-product development. "People like it for the speed and convenience, and they see it's cool." MasterCard's PayPass, American Express' ExpressPay and Visa's Contactless cards — the only three cards available so far — tout convenience and speed, factors that translate into higher revenue because, studies show, consumers spend more when they use cards than when they use cash.
CR80News profiles Transport for London's Oyster transit fare payment card.
Oyster, Transport for London's popular transit fare payment card, is about ready for a new benefit for its more than two million users. They'll soon be able to use their contactless card to make small purchases–coffee, newspapers, milk–at participating retailers. TfL in July released what it calls its shortlist of seven companies or consortia bidding on what could be a very lucrative contract.
The Payments Card Center of the Federal Reserve Bank of Philadelphia has just posted two new discussion papers.
The first, “Identity Theft: Do Definitions Still Matter?,” is an original research discussion paper by Industry Specialist Julia S. Cheney. This paper examines four types of financial fraud – fictitious identity fraud, payment card fraud, account takeover fraud, and true name fraud – that fall under the legal term identity theft. It also identifies three areas key to the development of solutions that would benefit from further definitional delineation.
The second, “Federal Consumer Protection Regulation: Disclosures and Beyond (PDF),” summarizes a symposium hosted by the Center this past June at which industry leaders, legal scholars, economists, consumer advocates and policymakers discussed standardized credit card disclosures and other means of protecting credit card consumers. Written by Industry Specialist Mark Furletti, the paper details the key policy recommendations of symposium participants.
Glenbrook regularly conducts two day Executive Workshop "boot camps" covering the world of payments.
This fall, in response to the tremendous financial services industry interest in online authentication, we are also teaching a one day "Authentication in Financial Services" boot camp which is being held in New York City on September 20th and in the San Francisco Bay Area on October 13th.
The authentication workshop will present a comprehensive view of both the problem: fraud, hits to consumer confidence, financial losses, etc., along with many of the proposed solutions. More details are available at the Glenbrook web site.
If you have questions or want more information about the Authentication Boot Camp or any of Glenbrook's other boot camps, contact Carol Coye Benson.
VeriFone announced this afternoon that it is planning to sell 10 to 12 millions shares of common stock to the public in a secondary offering. VeriFone Holdings, Inc. completed its initial public offering in late April 2005.
The Clearing House Payments Company has announced three new banks have become owners of the company: UBS, City National Bank (Beverly Hills, CA), and First-Citizens Bank (Raleigh, NC). » Continue Reading
Eric Dash reports for Thursday's New York Times on the steps taken by the card associations to ensure that personal information is secure at all times.
"These are akin to terrorist attacks; we must take very aggressive steps," John Philip Coghlan, the chief executive of Visa USA, said in an interview last month as he took over the card company's largest division."We can sit here and say we have zero liability and that no consumer will be harmed. If trust is eroded, the very foundation of the system will be eroded."
Citibank has announced that it will be introducing a MasterCard PayPass-based keyfob for its debit card customers later this year. Citi also announced that they will be piloting the use of PayPass with its credit card customers later this year. » Continue Reading
Visa USA and ID Analytics have announced a partnership that will enable financial institutions to better identify and stop fraudulent debit and credit card applications. » Continue Reading
Laura Smitherman reports for the Baltimore Sun on new POS terminals installed to support MasterCard's PayPass contactless cards at the M&T Bank Stadium.
Dee Ann Kuhn reports for Contactless News on Chase's blink card rollout.
By marketing its new payment vehicle “blink,” Chase hopes to differentiate the card’s brand name (blink) from the contactless chip technology (PayPass) and method of payment symbols (Visa and MasterCard) at the point of sale. “Blink refers to what the card does. PayPass refers to where to use it,” explains Tom O’Donnell, senior vice president, Chase Card Services.
QueueCard, a Palo Alto-based credit card authentication solution provider, announced today that it has closed a $7 million Series A Preferred Stock financing. The financing was led by Allegis Capital and Worldview Technology Partners. Jean-Louis Gasse, a Partner at Allegis Capital and Peter Goettner, a Partner at Worldview Technology Partners, have joined QueueCard’s Board of Directors.
The proceeds from the financing, which also include a strategic investment by Société Générale, will be used to complete development of QueueCard’s patent pending credit card security and authentication solutions and support initial customer programs.
Dan Richman writes for the Seattle Post-Intelligencer about the deployment of more than 400 terminals supporting MasterCard's PayPass contactless technology at Seattle's Qwest Field.
If it seems like yet another newfangled way to risk high-tech theft, the experts say don't worry. Fans were taking no financial risk by beaming their account information through a few inches of air, rather than swiping a card conventionally or handing it to a clerk. At most, they said, thieves determined and sophisticated enough to intercept the wireless transmissions might be able to discover a cardholder's name.
A paper on second generation micropayment systems (PDF) has been published by R. Párhonyi, L.J.M. Nieuwenhuis, and A. Pras of the University of Twente in the Netherlands. » Continue Reading
Julie Creswell reports for the New York Times on the announcement that Citigroup's head of consumer banking, Marjorie Magner, will leave the bank on October 1. » Continue Reading
It's a slow news day in the payments world this morning -- so I'm posting this reminder about an online workshop we'll be holding this fall focusing on mobile payments. For more information, see this earlier post. We've already had a number of sign-ups from around the world and expect to get things organized and rolling by the end of the month.
Amy Strahan reports for Bloomberg News on the results of a recent survey of debit card usage by the American Bankers Association. » Continue Reading
James Coates writes for Sunday's Chicago Tribune about speculation that Google may enter the payments market.
But, as endlessly touted by the Google Wallet rumor mongers, Google easily could supplant PayPal as the world's largest service for handling secure online payments for merchandise with customers' credit cards. After all, a huge percentage of the people who find their way to shopping sites like PayPal's parent eBay get there by way of a Google search.
Terry McCrann writes for The Advertiser about the changes in the Australian credit card market resulting from changes imposed by the Reserve Bank of Australia.
For the first time in this three-decade history of credit cards in Australia, people are finally getting a real choice – the option of paying specifically for the services they want from a card, and paying only for the service they want. And also getting the price of the "credit" in a card - the interest rate - set competitively in the market. That's to say, lower, much lower.
Timothy Egan reports for the New York Times about the upcoming changes in the US bankruptcy law that takes effect in October and the effects it is having on bankruptcy filings in advance of the changes.
Rebecca Buckman reports for the Wall St. Journal on the online payment firms targeting the market opportunity in China.
The growth of online-payment services -- which let people buy things on the Web through online accounts electronically linked to their bank accounts or credit cards -- is considered crucial to promoting electronic commerce in China, which has been slow to develop despite the emergence of a tech-savvy middle class.
At Glenbrook, we're considering kicking off an online workshop focusing on mobile payments that would run for several weeks this fall.
The basic idea is that we'd convene a online discussion group of interested participants where the only requirement for participating is that you agree to make a positive contribution to the discussion. Depending upon the size of the group, we might try augmenting it with a couple of teleconferences and web presentations along the way -- particularly if some of the participants would want to present their thoughts in that kind of forum.
If you think mobile payments are the "next big thing" and would be interested in participating, please email me and tell me more about your interest and why you'd like to participate. I'll get back to you re: details of participating as we get the workshop organized.
Morgan Stanley announced this afternoon that it has decided to retain its Discover Financial Services unit, reversing a previous decision made a few months ago by the company's former CEO.
The company's new CEO, John Mack, said "having looked closely at the Discover business the Board and I are convinced that Discover is not only a strong business, but also an attractive asset for Morgan Stanley. It is a unique, successful franchise with growth opportunities that gives Morgan Stanley a consistent stream of stable, high-quality earnings and substantial cash flow, diversifies the Company's earnings and broadens our scale and capital base." » Continue Reading
China Martens reports for the IDG News Service that Amazon.com will pay $40 million to Soverain Software "to settle two lawsuits alleging patent infringement."
TowerGroup has announced new research examining the impact that phishing attacks may be having on fraud perpetrated at ATMs and debit POS locations that concludes that losses from fraud due to phishing runs about $81 million annually in the US. » Continue Reading
Peppercoin has announced that it has secured $8 million in additional funding from venture capital firm Wall Street Technology Partners and previous investor Pod Holding. Peppercoin also announced that Mark Friedman has been named president and chief executive officer. » Continue Reading
alarm:clock profiles China's 99Bill.
Focused on eCommerce in China, 99Bill offers an email and mobile phone number-based online payment platform.
Wachovia announced today that it has begun notifying online customers that it will only communicate account information to them through its Secure Message Center. » Continue Reading
Accelitec has introduced PayPilot, a suite of RFID-based payment solutions to automate and enable faster, more secure and convenient payment methods, including Automated Clearing House (ACH), credit and prepay. » Continue Reading
Cyota has announced that its eVision risk management system has reduced incidents of online fraud by up to 80 percent at five top banks in the US and UK during its first 12 months of production. » Continue Reading
Google currently has posted eight positions in Merchant Payment Solutions.
Ginny Parker Woods reports for Tuesday's edition of the Wall St. Journal on NTT DoCoMo's mobile payments initiatives and its latest plan to evolve into "something like a bank" by embedding a DoCoMo credit card in its mobile phones.
So far, DoCoMo has sold some five million FeliCa wallet phones, but it's too soon to say whether the idea will take off since many users aren't taking advantage of the new features. Mr. Natsuno says that once people are hooked on the convenience of making small payments with the electronic cash stored in their phones, they'll naturally want to make bigger purchases using credit.
Meijer Stores and GE Consumer Finance have announced that Meijer is the first super center chain in the US to accept MasterCard PayPass as a contactless payment option at its stores and gas pumps.
Meijer is also introducing a PayPass-enabled Platinum MasterCard issued by GE Consumer Finance. The card combines the features and benefits of the Meijer private label store card with the worldwide acceptance of a MasterCard card and the added functionality of PayPass contactless 'tap and go' payments. The card has all the privileges of an in-store card, including access to exclusive sales, promotions and loyalty rewards, plus all the benefits of a traditional bankcard -- worldwide acceptance, competitive APRs and rewards on out-of-store spending. » Continue Reading
SmartPay Jieyin Ltd., a provider of payment services in China, has announced the completion of a strategic round of equity financing with RRE Ventures.
Commenting on the investment at a demonstration of SmartPay's services in Beijing, Greg Shen, SmartPay's CEO, said, ''I am extremely pleased that RRE has decided to invest in SmartPay as we continue to rapidly deploy our mobile payment services in China and build on our leadership position. RRE's expertise in the wireless and payments space is truly unique, and its network of connections should prove valuable in this rapid stage of SmartPay's evolution.
Jim Robinson IV, RRE Ventures founder and general partner, added, "We are excited about SmartPay and the prospects for building an innovative payments business in China. SmartPay has built up an early leadership position based upon its close interaction with Chinese banks and its unique mobile payment services. This provides a strong platform for future growth, and an opportunity to leverage numerous synergies with RRE's network of relationships and portfolio companies." Robinson will join SmartPay's Board of Directors effective immediately.
Terence O'Hara reports for the Washington Post on Capital One's strategy.
The leaders in any business make their moves before they have to, from a position of strength," Fairbank, Capitol One's chairman and chief executive, said in an interview Friday."I guess my definition of bad leadership is when one is making moves when others are making you do it. That's why we made the decision years ago. When [stand-alone] credit card companies were a wildly successful business model, we made a conscious choice to be more than a credit card company."
Gretchen Morgenson reports for the New York Times on the decision by some large shareholders of Providian to vote against the proposed acquisition by Washington Mutual because the deal price is too low.
Let's hope that other investors, large and small, join in to reject the deal. After all, because the premium in the takeover is so small, Providian shareholders have little downside if it fails. The upsides, meanwhile, are evident: a possibly higher price for the company from another bidder or a rising stock price based on the company's improving fundamentals.
Tim LeeMaster reports for The Standard from Hong Kong on Alibaba's use of a small Hong Kong-based merchant bank, Seraphim Capital, for negotiating its recent deal with Yahoo!
John Chi, one of Seraphim's founders, says his firm's approach is inherently different from the fee-driven, deal-based model that he said dominates the modern investment banking industry."We think more like a stakeholder,'' said Chi, who along with partner Casper Huang gets paid for his services with warrants and free equity, not fees.
Eileen Alt Powell reports for the AP on increases in the minimum payment amounts due on credit cards.
The changes being phased in this year are the result of a directive issued by federal banking regulators, including the Treasury Department's Office of the Comptroller of the Currency, in 2003.» Continue ReadingBarbara Grunkemeyer, deputy comptroller for credit risk, said the regulators were concerned that when the minimums were set too low, consumers' payments were barely covering the interest and fees on the cards and not making a dent on the principal amount that was owed.
Joseph DiStefano reports for the Philadelphia Inquirer on a lawsuit filed Thursday by 15 class action lawyers that contends that credit card issuers illegally conspired to force cardholders to submit disputes to arbitration instead of going to court.
The suit asks the court to stop the practice of requiring arbitration and to pay court costs and unspecified damages. The lawsuit contends that the arbitration services used by major lenders are far more likely to find in favor of the banks than of the consumers.
A few weeks back, we posted an initial Denver field test report of Chase's blink card from our friend Linda Elliott.
Today, she's back with an update. This is more great stuff from Linda, just in time for the weekend. Enjoy! » Continue Reading
The Federal Reserve Bank of Chicago has published a special edition Fed Letter titled "Innovations, Incentives, And Regulation: Forces Shaping The Payments Environment" (PDF) as a follow-up to its fifth annual payments conference held last May and summarizes the conference participants’ responses to the following questions:
Some quotes from today's testimony by Ian Macfarlane, Governor, Reserve Bank of Australia, responding to questions at a hearing of the Australian House of Representatives Standing Committee on Economics, Finance and Public Administration (PDF) regarding payment system reforms in Australia:
I think merchants as a whole have underestimated the power that they really have at their disposal. They are in this mindset because for 30 years they had all sorts of restrictions on them that prevented them from doing things that a normal business should be able to do; in other words, if you choose an expensive way of doing something, they should charge you more than if you choose a cheap way.For 30 years they had legal restrictions that prevented them from doing that. So some of them have actually developed a very defeatist attitude, as you just described. What we are trying to do is put the power back in their hands to actually stand up to the providers of credit cards and charge cards.
Essentially, the merchants somehow or other have to get together and use some bargaining power. In a negotiation between, say, Amex and a merchant, everyone in Amex has spent every day of their lives becoming an expert and a specialist in payment systems. They negotiate with the merchant. The merchant knows how to buy and sell things and inventory control. He knows almost nothing about payments. It is an incredibly unequal bargain.
E. Scott Reckard reports for the Los Angeles Times on an agreement Thursday by Wells Fargo to pay as much as $34 million to settle a lawsuit alleging that it had imposed improper credit card processing charges on about 96,000 California businesses.
The disputed charges included extra fees charged by the bank when merchants had to punch in a credit card number by hand, said Howard M. Jaffe, a Los Angeles lawyer representing the businesses."If a merchant failed to swipe the card, couldn't get the machine to read it and just manually input the numbers, they'd get dinged — usually by a modest amount, but it added up to millions and millions of dollars," he said.
99Bill and NetEase.com have announced an agreement to jointly establish an online NetEase prepaid card payment platform. Under the agreement, 99Bill launched the new online payment service to let the NetEase's prepaid online game card users to pay for the third party online products and services, and enable the Internet and wireless service providers to accept the prepaid card payment online. » Continue Reading
The Federal Reserve Bank of New York has announced a conference to be held on September 15 and 16 in New York City examining antitrust activity in card-based payment systems.
In recent years, credit and debit card systems have been the focus of significant antitrust inquiries and actions. Card-based payment businesses in Asia, Australia, Europe, and North America have been investigated for their methods of determining interchange fees, exclusivity arrangements, no-surcharge rules, honor-all-cards rules, membership requirements, and governance policies.Antitrust activity worldwide has many similarities, such as a focus on interchange fees, and many differences, such as exclusivity rules in one country and no-surcharge rules in another. In addition, antitrust efforts directed at debit card and credit card systems show similarities and differences.
This conference's focus is two-pronged: to present research on the cause and on the effects of antitrust actions. The organizers of the conference hope to address the need for better information on the efficacy of the different remedies mandated by the courts worldwide.
Card Technology reports on the Japanese Edy contactless electronic purse and bitWallet, the operator of the scheme.
According to published reports, however, overall monthly Edy transactions topped 10 million for the first time in June.Earlier this year, a bitWallet source told Card Technology that average transaction amounts for Mobile Edy were running 20% higher than the roughly 400 yen ($3.80) consumers spent with Edy cards. The operator believes the higher transaction amounts may be because consumers can view their purse balances on their handset screens and can top up the account over the mobile network.
About 20,000 merchants in Japan accept Edy cards and Mobile Edy. BitWallet recently enabled users to transfer Edy value from person to person.
In yet another example of integrating electronic purse functionality for transit into mobile phones, Card Technology reports on initiatives in Korea to enable subscribers of the three major mobile carriers to be able to use their mobile phones for transit payments.
With it, subscribers of mobile carriers SK Telecom, KTF and LG Telecom will be able to read on their handset screens how much value they have left in their electronic transit purse and to reload the purse over the mobile network. They will not only be able to pay for train and bus fares with a tap of their handsets on gate readers, but also make some retail purchases.
Card Technology reports on NTT DoCoMo's efforts with East Japan Railway to develop a common contactless infrastructure for payments.
Separately, NTT DoCoMo is exploring ways to expand the retailer infrastructure capable of accepting the contactless e-cash loaded on to its mobile phones.
Heartland Payment Systems has announced the initial public offering of its common stock at a price of $18.00 per share. Heartland's common stock has been approved for listing on the New York Stock Exchange under the symbol "HPY". The company's final prospectus for this offering is available from the SEC's Edgar site.
Yahoo! and Alibaba.com have announced a definitive agreement to form a long-term strategic partnership in China. Yahoo! will contribute its Yahoo! China business to Alibaba.com and the two companies will work together in an exclusive partnership to grow the Yahoo! brand in China. Yahoo! is investing $1 billion in cash to purchase Alibaba.com shares from the company and other shareholders giving it a 40 percent economic interest with 35 percent voting rights in Alibaba.com. » Continue Reading
Rebecca Buckman reports for the Wall St. Journal on the slew of companies popping up in China to gain a foothold in online payments.
Enter companies such as PayPal, 99Bill and AliPay. PayPal hopes its global brand and experience will win it customers, particularly when it extends its services to Chinese online-auction site EachNet in September. EachNet is wholly owned by eBay. PayPal also is offering "buyer protection" against fraud for transactions on those sites.Homegrown Chinese payment services think they have an edge over foreign companies because they understand the nuances of how local people like to use the Web, says Oliver Kwan, chief executive of 99Bill, which he founded last year and which has about 80 employees.
Péralte C. Paul reports for the Atlanta Journal-Constitution that Visa USA announced Wednesday it will stand by its original decision that CardSystems Solutions no longer will be allowed to process payments on Visa-branded credit and debit cards after Oct. 31.
After the breach was revealed, Visa gave its member banks who use CardSystems until Oct. 31 to find another processor. But Visa agreed to hold further talks with CardSystems at the request of U.S. Rep. Rick Renzi (R-Ariz.), because 90 of the Atlanta company's 115 employees work at a Tucson processing center. The remaining 25 are at CardSystem's Atlanta headquarters. Those talks did not dissuade the credit card giant from its earlier stance, a Visa spokesman said.In a related story, Paul reports on how the CardSystems breach experience has affected other payment processors including TSYS.
"Everyone in this business has got to understand that their security represents a real reputational risk, not only for them, but for the long-term health and well-being of the entire industry," said Phil W. Tomlinson, TSYS' chief executive officer. "We can't allow these breaches to continue," he said. "If not, the regulators will do it for all of us, and it will not eliminate the sloppy or rogue players."
Ted Griffith reports for the Wilmington (DE) News Journal on Juniper Bank's $455 million deal to become the credit card issuer for US Airways following its upcoming merger with America West. Juniper is displacing Bank of America as US Airway's credit card issuing partner.
According to the regulatory filing, there will be a two-year transition period in which both Bank of America and Juniper will be able to issue cards under the US Airways brand. After two years, Juniper gets exclusive rights.
Jane Kim reports for the Wall St. Journal on how major credit card issuers are now charging maximum penalty rates of over 30 percent.
The higher penalty rates could have a big impact on cardholders later this year when many issuers are expected to boost monthly minimum payments in response to guidelines issued by federal bank regulators, adds Greg McBride, a senior financial analyst at Bankrate.com. The guidelines call for minimum payments that are high enough to cover finance charges and fees during the billing cycle while chipping away at some of the consumer's original debt, or principal.