This Week In Credit Card News: Card Debt And High Inflation May Dampen Holiday Shopping

Holiday Spending at Weakest in 5 Years as Shoppers Focus on Deals, Not Splurging

Black Friday events appeared to draw lackluster crowds this year, with shoppers laser-focused on discounts and bargains after holding back spending ahead of what is expected to be the weakest holiday season in five years. The National Retail Federation expects overall sales to increase by 3% to 4% in November and December, the slowest pace in five years, compared to the 5.4% increase last year and the 12.7% spike in 2021 following the depths of the pandemic. [New York Post]

American Spending Has Kept the Economy Going Since the Pandemic. It May Finally Be Stopping

Not even two years of soaring prices and mounting interest rates have stopped Americans from opening their wallets and tapping their credit cards. The consumer’s willingness to keep paying high prices has kept the US economy relatively strong, but that attitude could soon be shifting. Some experts think the combination of high housing costs, rising credit card debt and shrinking savings could mean the end of post-Covid splurges, maybe even as soon as this year’s holiday shopping season. [CNN]

Average Credit Card Debt Is on the Rise for Americans in 2023

Recent data from TransUnion confirms this, publishing a report that details the average credit card debt across the U.S. In every demographic, the numbers are startling. According to the Federal Reserve Bank of New York’s latest Quarterly Report on Household Debt and Credit, credit card debt in America has increased by $45 billion from Q1 of 2023. That represents a 4.6% increase in a single quarter, with cardholders shouldering thirteen-figure debt at $1.03 trillion for the first time. In short, that amounts to an average balance of $5,733 per cardholder. Eye-watering, to say the least–and the fact that many of us carry no balances makes this statistical average even more alarming. [Fortune]

Mastercard Scores China Breakthrough

Global payments giant Mastercard can finally start issuing yuan-denominated credit cards in China, after years of waiting. The People’s Bank of China said that a joint venture between Mastercard and state-backed NetsUnion Clearing can start operating a bank-card clearing institution in the country. The approval effectively allows domestic banks to issue yuan-denominated cards bearing Mastercard’s brand. [The Wall Street Journal]

The Influence of Payments on Customer Loyalty

Research in the UK, which explored the current drivers of brand loyalty and how retailers can engage customers in the current economic climate, revealed an even bigger challenge for retailers, with customers blacklisting them all together following a poor payment experience. Just over two fifths (42%) of shoppers have taken their custom elsewhere after experiencing a slow checkout and payment process, and over a quarter (28%) wouldn’t return to a store due to a lack of payment options. The influence of the payment process on customer loyalty isn’t just applicable online either. Shoppers demand choice and speed when checking out in store, with our research revealing that a third of shoppers (32%) see having the option to use their preferred payment method as the most important factor in creating a positive payment experience instore, followed by a similar number (31%) who see being able to use self check-outs as the most important factor. [Retail Times]

Venmo, Cash App Users Sue Apple Over Peer-to-Peer Payment Fees

Apple has been sued by Venmo and Cash App customers in a proposed class action claiming the iPhone maker abused its market power to curb competition for mobile peer-to-peer payments, causing consumers to pay “rapidly inflating prices.” Four consumers in New York, Hawaii, South Carolina and Georgia filed the lawsuit on Friday in San Jose, California, federal court. They alleged Apple violated U.S. antitrust law through its agreements with PayPal’s Venmo and Block’s Cash App. Apple’s agreements limit “feature competition” within peer-to-peer payment apps, including prohibiting existing or new platforms from using “decentralized cryptocurrency technology,” the complaint said. The lawsuit seeks an injunction that could force Apple to divest or segregate its Apple Cash business. [Reuters]

Forty Percent of Millennials Use Mobile Wallets to Pay Bills the Day They’re Due

The popularity of digital bill payments is increasing as more and more consumers seek convenience and efficiency in managing their finances. New research reveals that in March 2023, 60% of consumers reported using mobile wallets to pay their bills, a 22% increase from the previous year. This trend was particularly prominent among high-income consumers, with usage increasing from 55% to 68% during the same period. Millennials were found to be the demographic most responsible for pushing mobile wallet bill payment into the mainstream, with nearly 80% of this cohort having used mobile wallets for bill payments in the 12 months prior to the study. Likewise, both millennials and bridge millennials were found to have the highest rates of both frequent and occasional use of mobile wallet bill payments among all demographic segments, at 40% and 79%, respectively. [PYMNTS]

Australia to Amend Law to Regulate Digital Payments like Apple, Google Pay

Australia’s government said it would bring Apple Pay, Google Pay and other digital payment services under the same regulatory umbrella as credit cards and other payments as part of legislation set to be introduced to parliament this week. Digital wallets from the likes of Apple. Google and Tencent have exploded in popularity but are not captured by Australian payments law. The legislation, first flagged last month, will broaden the legislation that empowers the Reserve Bank of Australia to regulate payments so that it applies to new and emerging technology. [Reuters]

Why Buy Now, Pay Later Options Aren’t Necessarily Better than Credit Cards

Between Black Friday deals and Americans’ collective credit card debt reaching more than $1 trillion, you may be looking for alternative payment methods this holiday shopping season, including buy now, pay later plans. Buy now, pay later options accounted for around $6.4 billion of online spending in October, according to Adobe Analytics. But while they may offer attractive benefits, such as interest-free payments, they aren’t necessarily better or safer than using a credit card. [CNBC]

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