Decoupled Debit Cards- What?
For a minute, lets imagine a new debit card in your wallet. This new debit card is just like all the others; it looks like a credit card; you swipe it like a credit card. But, different than the others, it's not associated with a specific bank account. Instead, you tell the issuer of the card, say Capital One for example, which checking account you want the money to come from. This new debit card is like a universal debit card that you link to all of your many different checking accounts. So now instead of having a pocket full of debit cards, you have only one.
Okay, let's wake up! Day dream is over! Back to reality.
What if this dream were reality? What if I told you it IS reality?
Capital One bank has quietly been piloting this new debit card for almost a year now.
As reported on PaymentNews;
"Having quietly tested the cards via direct marketing with their own credit card customers earlier in the year, Capital One says it now has its first co-brand debit pilot in market with in-store kiosk, Internet and phone-based enrollment. It says it plans for a second merchant client to launch its pilot this summer and for an affinity client to launch in the third quarter.
With this new debit card, Capital One will offer awards with every purchase! Whether you're using the card to pay for groceries, credit card bills, or to purchase gasoline, you might earn points or other rewards from the issuer. Gwenn Bezard of Aite Groupe says..
"There's a huge difference between the rewards programs of credit cards and debit cards. The actual value received by the customer is 64 cents for every $100 spent with a credit card, while the value received for a debit card program is 10 cents. The actual value that a customer will receive (with the Capital One MasterCard) is expected to be between 40 cents and 60 cents. That's four to five times higher than the typical debit rewards card."
What's in it for Capital One? They earn income know as 'interchange' for each transaction that you complete. Gwen Bezard describes in a report by research firm the Aite Groupe that decoupled debit cars will be a "direct assault against incumbent deposit financial institutions." This means that many banks risk losing HUGE amounts of income to Capital One. If this pans out as Capital One hopes, it will redefine the bankers view of interchange income. Not only would the banks lose the interchange, they'd still have to pay for the processing charges, further damaging their income. Processing includes handling disputes and error resolutions, insufficient fund issues, and ACH transaction fees.
Here's a short video on US Banker, the Lowdown on Decoupled Debit Cards.
A reader asks...
What happens with my credit cards after filing bankruptcy? Will I still be able to use them? Do I send them back? What if I need a credit card in the future?
Here we go, again! Do you remember the TJ Maxx data security breach? This new compromise isn't yet as big, but could be!
News just started to filter out to financial institutions on Friday that VISA branded cards and their card holders were compromised. Because of the agreements that VISA has with their merchants, not much more was said. They only explained that a merchant discovered a problem.
Now, a few days later, it is official. The breach happened at Hannaford Brothers grocery stores. Thus far, 4.2 million cards have been compromised and 1800 cases of fraud have been reported.
Hannaford reports that no identifying personal information was exposed, only VISA card and PIN numbers.
So, if you used your VISA debit card in a Hannaford grocery store in the Northeast, or a Sweetbay store in Florida, or in an independent grocery store selling Hannaford branded products, you should immediately contact your financial institution.
Yesterday, the VISA networks put out a formal alert to all financial institutions explaining the compromise. This alert directs the financial institutions to block the affected cards and re-issue replacements.
Apparently this breach was discovered on Feb. 27, 2008, and shut down on March 10th. According to reports, the data breach started on Dec 7, 2007.
Your financial institution has received a list of all their customers with accounts that were compromised. If you discover unauthorized transactions on your card, immediately contact your financial institution. Keep records of everything just in case you need to follow up; copies of statements, name of the person that you spoke with and the time of day, dollar amounts, dates, etc.. You have protection under the banking laws just in case you are a victim of fraud.
Just received this alert from the IRS about the Economic Stimulus Payments-
WASHINGTON — The Internal Revenue Service announced today that it will begin sending more than 130 million economic stimulus payments starting May 2. The initial round of weekly payments will be completed by early July.
The IRS also announced the availability of a new online calculator on IRS.gov to help people determine the amount of their stimulus payments.
Stimulus payments will be made by direct deposit to people who choose to receive their 2007 income tax refunds through direct deposit. All others will receive their economic stimulus payments in the form of a paper check.
“To receive an economic stimulus payment, people just need to file their tax returns as they usually do,” said IRS Acting Commissioner Linda E. Stiff. “The payments will be automatic for the vast majority of taxpayers. Some lower-income workers and recipients of certain Social Security and veterans benefits who don’t normally need to file a tax return will need to do so in order to receive a stimulus payment. IRS.gov has all the information people need to help them obtain a stimulus payment.”
Stimulus payments will be sent out in the order of the last two digits of the Social Security number used on the tax return.
Because the IRS will use the Social Security number to determine when checks are mailed, taxpayers may receive their checks at different times than their neighbors or other family members. On a jointly filed return, the first Social Security number listed will determine the mail-out time.
The IRS expects to make about 34 million payments within the first three weeks after the payment schedule begins May 2. With more than 130 million households expected to receive stimulus payments, more than 25 percent of the payments will be made in the first three weeks.
Taxpayers who choose direct deposit on their federal income tax returns can expect to receive their economic stimulus payments between May 2 and May 16 provided their returns were received and processed by April 15, 2008. For taxpayers who did not choose direct deposit on their tax return but whose returns were processed by April 15, the paper checks will be in the mail starting May 16, with the initial mailings completed by around July 11.
The IRS is also announcing today the availability of an on-line calculator on IRS.gov to help taxpayers determine if they are eligible to receive an economic stimulus payment and if they are, how much they can expect. Anyone who has prepared a 2007 income tax return can use the calculator. It will ask taxpayers a series of questions, so they should have their 2007 tax returns handy. After answering the questions, the calculator will provide the projected dollar value of the payment.
Below are the schedules for economic stimulus payments related to tax returns processed by April 15, 2008.
Stimulus Payment Schedule for Tax Returns
Received and Processed by April 15
Direct Deposit Payments
If the last two digits of your Social Security number are:
Your economic stimulus payment deposit should be sent to your bank account by:
00 – 20
May 2
21 – 75
May 9
76 – 99
May 16
Paper Check
If the last two digits of your Social Security number are:
Your check should be in the mail by:
00 – 09
May 16
10 – 18
May 23
19 – 25
May 30
26 – 38
June 6
39 – 51
June 13
52 – 63
June 20
64 – 75
June 27
76 – 87
July 4
88 – 99
July 11
A small percentage of tax returns will require additional time to process and to compute a stimulus payment amount. For these returns, stimulus payments may not be issued in accordance with the schedule above, even if the tax return was processed by April 15.
All or part of an economic stimulus payment may be applied to back taxes or certain other debts of the taxpayer, such as delinquent child support and student loans. In such cases, the IRS will send a letter to the taxpayer explaining the offset.
To accommodate people whose tax returns are processed after April 15, the IRS will continue sending weekly payments. People who file tax returns after April 15 and receive a refund can expect to receive their economic stimulus payments in about two weeks after receiving their tax refunds, but not before the date they would have received their payment if the return had been processed by April 15. To ensure taxpayers receive their stimulus payment this year, they must file a tax return by Oct. 15.
Two bureaus of the Treasury Department are involved in making the payments. The IRS will calculate the amount of each economic stimulus payment based on the tax year 2007 income tax returns it receives. The IRS will then forward the information to the Financial Management Service (FMS), which is the bureau of the Treasury Department that makes federal payments such as Social Security benefits, federal income tax refunds and, now, economic stimulus payments.
The IRS reminds taxpayers that they can get their stimulus payments faster by using direct deposit when they file their tax return.
In addition, the IRS urges taxpayers to file electronically. For people who normally don’t need to file a tax return, the IRS and Free File Alliance have a special program set up to allow for free electronic filing.
Seeing that we're almost through the first 90 days of the year (76 and counting..), I thought I'd look to see how I'm progressing towards my new years resolutions. The original post is in quotes...
* Drop Sixteen Pounds by April 1- just before hunting season '07, I weighed in at 166#. This morning I'm 180#. I have this really cool Navy Seals exercise and diet plan that worked very well for me a few years ago. I'll begin that plan again to help reach this goal.With two weeks to go, I've made progress, but I'm not nearly as close to my target. Right now I'm at 174#. At this rate, it will be the end of April before I'm down to where I'd like to be. Good news is that I'm going in the right direction!
* Payoff the MBNA Visa Card- I have a few more months at the intro rate of 1.49%, then it will adjust to prime +. The balance is right around $7k (I intentionally charged some big ticket expenses and purchases instead of taking the money out of a high yielding money market account, of which I will do when the rate on the credit card adjusts.)I was able to meet this goal, although I didn't exactly pay it off. In reality, I paid off about $4500 of the amount owed and refinanced the balance into long term debt. The good news here is that we are down to a car loan, our mortgage, our HELOC, and a small personal loan. Other than our monthly living expenses, this is all of our debt. Progress!
* Sell the boat- not the little fishing boat, but the run about. On top of being expensive to insure and maintain, the price of gasoline is becoming quite prohibitive. The only problem with selling it now is I'll be taking a bath in losses because I'll need to price it low enough to attract a buyer. The boat, although in extremely good condition, is 20 years old this year. This 23' Regal Valenti runs like a top, powered by a 7.4 liter Mercruiser. I've owned it now for 4 years and loved almost every minute with it! In case you or somebody you know wants to buy it, I'll email you pictures! It has a brand new 2006 Venture Trailer that can go with it, if the price is right!This is one thing that I really do not want to do, but understand that I really should. It's not yet the right time of year to put a boat up for sale (we still have a foot or two of snow on the ground..). I think that my bath might be worse now than what I originally thought. I'm not in a position where I NEED to sell the boat, its just that if I don't use it more than a few times a year, is it really worth keeping?
* Read a book a week- right now I'm finishing up Rudy Giuliani's biography (not that I'm a fan or anything, just reading the book). Next in line will be Tim Ferriss's 4 Hour Work Week or Lee Iaccoca's latest.I finished reading Giuliani's biography. I'm glad that's over. I also finished Tim Ferriss's 4 Hour Work Week. This has to have been one of the most eye opening books that I have ever read. Highly recommended! I probably would have read a couple of more books by now, but I've been so engrossed reading, and re-reading this book, I haven't wanted to use the time that I've found for anything else, yet!
* Work 4 hours per week!It was relatively easy to shave off a few hours a week by employing some of the methods discussed in the 4 Hour Work Week. Progress!
* Stay within the budget!Anyone who has ever tried to stay within a budget will tell you that one of the hardest parts of establishing a budget is keeping track of everything that you spend. Simplifying our spending was and is the hardest part. However, the fewer the daily expenses, the less there is to keep track of. More progress!
* Continue to grow my business- will be adding a few new services to include tax prep and plastic card POS processing.Thus far, I've progressed to the point of having the plastic card POS processing service available, but haven't yet pursued it. It's on the back burner right now. I need to work on the game plan.
* Visit GracelandOur plans for this goal have changed a tad. Instead of going to Tennessee, we're going to DC. We'll be visiting all of the attractions.. We'll be there for about a 3 days, so we should have enough time. From there, we're going to visit Hershey, PA, going to Hershey Park. No telling how long they'll be open now that they're moving operations to Mexico....
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