Vehicle Sales Slow; Mastercard Acquires Minna Technologies; JPMC To Open New Branches

Fed Chair Powell says policy isn’t “predetermined.” Vehicle sales slow on prices, interest rates. Visa acquires cybersecurity firm Featurespace. Mastercard acquires subscription management startup Minna Technologies. Merchants fight back against “friendly fraud.” Klarna expands distribution through Adyen. Affirm mulls response to rate cuts. Two tech-focused credit unions to merge. JPMC will open nearly 100 new branches.

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Vehicle Sales Slow On High Prices, Financing Costs

After last month’s 0.50% point rate cut, all eyes are on the Fed’s next move. To that point. Fed Chair Jerome Powell said last week that the central bank would lower rates “over time” and emphasized that interest-rate policy is not on a predetermined path. Powell reinforced his belief that the U.S. economy is on sound footing and that inflation will continue moving towards the Fed’s long-term 2% target. Meanwhile, auto sales are sliding due to higher prices and financing costs. The average new vehicle sold for over $44,000 in September, down 3% from 2023. Industry analysts expect vehicle sales for Q3 to come in roughly flat vs. the year prior.

Visa & Mastercard Make Acquisitions; Rising Rates Of “Friendly Fraud”

Mastercard announced last week it is acquiring Minna Technologies, a subscription management startup. Sweden-based Minna Technologies enables consumers to see and manage their subscriptions in a centralized place, whether that’s within a banking app or another application. The idea of a “control center” for recurring subscriptions has caught on as consumers juggling recurring plans for everything from cell phones to streaming services and even groceries. If users find it difficult to cancel a subscription, it’s not uncommon for them to initiate a chargeback or to request their bank to block a biller’s transactions. Such actions can be costly for merchants to respond to and even result in being booted from their payment processor, if chargeback rates are abnormally high. Mastercard’s move comes as the company and arch rival Visa seek to continue expanding capabilities beyond card payment processing into related areas and value-add services.

Meanwhile, Visa announced last week it’s acquiring cybersecurity firm Featurespace. The U.K.-based company provides analytics and cybersecurity software products and, per Sky News, has been valued at nearly $1Bn. The acquisition should help fight scammers and fraudsters, in what Visa CEO Ryan McInerney describes as an “arms race.” Visa expects the acquisition to close by next September, pending customary regulatory reviews and approvals.

In other card-related news, surveys show rising rates of so-called “friendly fraud,” in which consumers knowingly submit false chargeback claims. In a recent survey of 300 retailers, nearly 75% reported an18% average increase in friendly fraud over the past three years. The increase is hurting retailers’ bottom lines, and encouraging them to implement stricter policies and new AI-driven tools to mitigate the risk of bogus chargebacks.

Klarna Expands Distribution Through Adyen, Affirm Mulls Rate Cut Response

Klarna is looking to provide retail shoppers more ways to access its buy now, pay later service through a new partnership with payment processor Adyen. The new partnership will make Klarna available at more than 450,000 Adyen-powered point-of-sale terminals at bricks-and-mortar merchants. The capabilities will initially roll out in Europe, North America, and Australia, followed by a wider rollout. The partnership builds on an existing arrangement in which Adyen makes Klarna’s BNPL options available for ecommerce payments.

Meanwhile, Affirm is evaluating offering more consumers 0% APR financing or lower rates in response to the Fed’s decision to cut rates by 0.5% point last month. Shoppers won’t see the benefits of lower rates immediately, however, with Affirm’s CFO saying any benefits from lower interest rates would come over the next one to two years.

Tech-Focused Credit Unions To Merge

Two technology-focused credit unions are merging. First Tech Federal Credit Union, of San Jose, California, and Digital Federal Credit Union, of Marlborough, Massachusetts, announced their intention to combine through a merger of equals. The transaction is subject to approval by the NCUA, which oversees credit unions, and First Tech’s membership. If approved, the combined entity would have nearly $30Bn in assets and a more than 50-branch presence across eight states.

JPMorgan Chase To Open Nearly 100 New Branches

JPMorgan Chase, the largest U.S. bank by assets, is opening new branches. Chase is planning to expand its footprint with nearly 100 new branches around the country, including in rural areas and inner cities. In addition to standard ATMs, personal bankers, and teller windows, the branches will also offer workshops for small businesses and on financial literacy, which will be open to the public. The bank will hire 75 “community managers” to help staff the new branches, with the employees focused on partnering with local organizations to help teach residents how to protect and growth their wealth. JPMorgan Chase CEO Jamie Dimon told the Wall Street Journal, “This is not just ‘do-gooding,’ this is business. We measured these branches by number of customers, deposits, investments, and the model works.”

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