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SRM Perspectives on Key Industry Trends

CFPB’s Buy Now, Pay Later Stance Should Comfort Banks, Credit Unions

Posted by Paul Davis on Sep 22, 2022 11:21:00 AM

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Banks and credit unions interested in offering Buy Now, Pay Later (BNPL) services should be pleased with the latest report from the Consumer Financial Protection Bureau (CFPB).

Many FIs have been reluctant to dive into the popular consumer offering, largely due to uncertainty over the regulatory environment. SRM asserted in a recent report that banks and credit unions have the experience and tools necessary to handle regulatory scrutiny.

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Topics: Payments, Vendor Contract, Buy Now Pay Later, BNPL, CFPB, Credit Cards

Durbin Bill Aims to Fundamentally Change the Credit Market, Causing Disaster for Industry

Posted by Myron Schwarcz and Keith Ash on Sep 7, 2022 11:16:00 AM

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Ever since the Durbin Amendment upended the debit card industry in 2010, insiders have speculated that Sen. Richard Durbin (D-Ill.) would eventually pursue similar changes to the credit card industry.

Sen. Durbin made it known during a May 2022 Senate Judiciary Committee meeting that credit card reform was in his crosshairs. As inflation rose, he found a bipartisan partner in Sen. Roger Marshal (R-Kan.) and introduced bill S.4674, the Credit Card Competition Action of 2022.

This bill reflects many principles Reg II applied to routing, intending to increase competition and reduce merchant costs. If this bill becomes law, it will have significant consequences for issuers and consumers, potentially completely upending credit access as we know it today. It could also lead some issuers to dial back rewards and benefits.

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Topics: Durbin Amendment, Interchange, Fee Income, Credit Cards

Inflation, Rate Hikes & Falling Consumer Confidence: Brace for Uncertainty

Posted by Paul Davis on Jul 26, 2022 11:19:00 AM

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Banks and credit unions must prepare for some consumer payments and credit quality turbulence.

Consumer prices rose by an astounding 9.1% by June from a year earlier – a 41-year high – causing the average American to spend roughly $460 more per month than they did a year ago, according to Moody’s Analytics Senior Economist Ryan Sweet.

Inflation has led the Federal Reserve to get aggressive with interest rates, including a 75-basis-point hike earlier this month. There is talk the Fed could opt for an unprecedented 100-basis-point increase in light of the June data.

Rising rates could deal another blow to consumers already facing higher costs for goods.

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Topics: Payments, Consumer Spending, Credit Cards, Mortgages

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