ISIS, the mobile wallet application supported by AT&T, T-Mobile and Verizon, promises to “fundamentally transform how people shop, pay and save” by allowing users to tap their phones rather than swipe a card when they pay for something cashlessly.

One of the hurdles to transforming the way we shop, of course, is merchant adoption. ISIS can have as many users as there are smartphone-havers on the planet, but it will be utterly meaningless if they cannot tap their phones when they wish to part ways with their money. To avoid this, ISIS will need merchant partners — and now it has them.

Among the nationwide partners ISIS announced Wednesday are well-known brands like Coca-Cola, Champs Sports, Aeropostale, Foot Locker, Jamba Juice, Dillard’s and Macy’s. On top of this, ISIS has announced partnerships with local businesses in Salt Lake City and Austin that include local sports franchises and stadiums, local retailers and local restaurants and cafes.

“By systematically building out merchant acceptance in an approach that is both geographically focused and centered around everyday spending, ISIS intends to create a comprehensive mobile commerce experience for consumers that will simultaneously benefit merchants of all sizes,” said Rick Oglesby, a senior analyst with Aite Group, in prepared remarks.

Location, location, location

Of course, ISIS does not exist solely to make point-of-sale transactions more frictionless, it also seeks to create a platform for merchant and location-based deals. It has been difficult for local merchants to make smartphones work to their benefit — frequently consumers use them to comparison shop on the web while in physical stores, much to the detriment of physical retailers’ bottom line. With a more robust mobile wallet user base, physical retail can, in theory, take advantage of its locality by pinging consumers with special offers when they’re nearby.

In prepared remarks, Jim Stapleton, chief sales officer of ISIS, described the product as “a mobile commerce experience that transforms how consumers shop and interact with their favorite brands.”

High hopes (and presumably a few careers) are riding on the success of the mobile wallet. Finally, it seems that we will be able to see if ISIS can do all it promises to.

Mobile Wallet ISIS Announces Merchant Partners

Bank of America is delivering personalized deals and offers to customers in select states after bank employees piloted the program earlier in the year. Called BankAmeriDeals, the program aims to strengthen the relationship with existing customers and attract new business.

Last week, Bank of America customers in Georgia, North Carolina and South Carolina began receiving cash-back offers when they viewed their accounts through online banking.

“Since January, the program was tested by Bank of America associates nationwide,” said Tara Burke, a Bank of America spokesperson.

The BankAmeriDeals program doles out offers that are chosen for customers based on their spending history.

An offer may require that a customer make a $25 purchase to receive $5 cash back.

After accepting an offer and having it loaded onto a Bank of America debit or credit card, the customer simply needs to make the qualifying purchase. The cash back is redeemed as a statement credit that shows up in the next account statement.

The deals include major national brands and local small businesses, Burke added.

Other Bank of America customers who are waiting to participate in the BankAmeriDeals program will have to wait little. “We plan to roll out the program nationwide by the end of the year,” said Burke.

The introduction of BankAmeriDeals is expected to help compete with other major banks that are offering similar programs. Chase, Regions Bank and Ally Bank are few of them that currently have merchant-funded cash-back programs, but only for debit card users.

Like American Express, which launched its personalized deals program this week, Bank of America hands out these types of offers to credit card customers, who can stack the benefits of their card’s rewards or cash-back program (if any) with the merchant-funded offers.

Bank of America Begins Rollout of New Cash Back Program

Jonah Wieland/flickr source

New York City’s local legislature voted Tuesday to introduce a responsible banking law to its books, forcing banks that wish to do business with City Hall to demonstrate their commitment to investing in New York. Los Angeles’s city council did the same on Tuesday. This isn’t terribly uncommon for cities to pass legislation of this nature, but it is certainly notable when the Capitol of Capital does so, especially considering its billionaire mayor made his money in the financial services industry.

Mayor Bloomberg isn’t at all happy with the rule, which passed 44-4, and which would make banks disclose both “investments and business practices in neighborhoods,” as well as creating a “community-investment advisory board,” according to Bloomberg.

In fact, the mayor plans on vetoing the measure. The New York Times reported that Mayor Bloomberg thinks there’s already enough regulatory burdens on banks:

In a brief interview Friday…Mr. Bloomberg said he strongly opposed new restrictions on where the city could put its deposits, which can be as much as $7 billion. “You would think, between the federal government and the state government, we’d have enough bank regulations,” Mr. Bloomberg said. “I don’t know why the City Council thinks that they have the expertise, or can really add anything other than just adding costs to banks to try to comply.”

Many municipalities have introduced similar legislation following the foreclosure crisis, the logic being simple: if banks’ strategies are damaging our community and tax base, why should City Hall do business with them? It can be interpreted as punitive, on the one hand, but city legislatures likely see it as a way of encouraging banks to behave more responsibly. After all, helping city hall do its payroll isn’t the only gig in town.

Cities as far left as Berkeley, Calif., to as stalwart as Cleveland and Pittsburgh have introduced similar legislation. Unlike New York, however, none of these cities are home to the bulk of the financial services industry. When thousands of homes in Cleveland are foreclosed on by Citibank or Chase, Cleveland’s loss is effectively New York’s gain. A New York bank can auction these homes off at the Cuyahoga county courthouse, selling directly to another New York-based bank or home flipper, and Cleveland loses again. This is why it makes sense for Cleveland to have a responsible banking initiative, even if it hasn’t protected the city from Wall Street’s whims.

For New York to follow Cleveland and Berkeley’s lead is interesting because the city is packed with financial services workers who get rich off of Wall Street’s business — both the good and the bad. But of course New York City is hardly a small place, nor is it an even playing field — the West Village and East New York might only be an hour apart on the subway, but the differences are likely vaster than they were in times past. In fact, East New York was recently the site of an Occupy protest wherein Occupy East New York reclaimed a foreclosed home for a homeless family.

Banks might point out that the Community Reinvestment Act of 1977 already forces banks to behave responsibly on a local level — they’d be both wrong and right. The CRA, which was created to help undo the racist FHA-approved practice of “redlining,” demands that banks must lend to poorer customers within their footprints; in cities where they have branches, they must lend to people from poor areas in the city. Some commentators on the right frequently place blame on CRA for causing the foreclosure crisis, and the argument goes like this: CRA forced banks to lend to people who might not otherwise quality, and this is what ultimately led to the crisis. This likely overestimates the efficacy of CRA, which can only be enforced when a bank wishes to acquire or merge with another bank or apply for more bank branches. It’s not a particularly burdensome regulation, if you consider how potentially rare opportunities for enforcement are — the FDIC cannot simply shut a bank down for shirking its CRA duties.

And similarly, responsible banking acts are emblematic of how difficult it is for localities to sink their claws into footloose capital. Handling City Hall’s money likely isn’t likely to be the biggest contract a bank can land in New York. But it’s a worthwhile symbolic victory for city councils that are otherwise helpless in the face of a complex and interconnected global financial system, and frequently home to pointless political grandstanding besides. It’s truly cynical, however, for New York’s billionaire mayor to veto the bill, which would likely be as toothless as any existing regulation on the financial industry.

New York City Passes Responsible Banking Law, Bloomberg Plans to Veto

Paul Heaberlin / Flickr source

U.S. Bank plans to restructure some of its fees this year. In the initial stage, customers will face a slightly higher overdraft fee — requiring greater diligence when managing their spending to avoid a negative balance.

Starting June 29, 2012, the fee for an overdraft item of $15 or less is $15; for an overdraft item greater than $15, the fee is $35 per occurrence. Currently, U.S Bank charges $10 per overdraft item that is $20 or less and $33 per overdraft item that is greater than $20.

“This change is part of an overall review of our deposit fees which will include the elimination of other fees such as early account closure fees on checking, savings and IRAs, as well as a reduced and simplified stop payment fee,” said Teri Charest, a U.S. Bank spokesperson, in an email.

“If our customers choose to have overdraft protection on their accounts, we offer fair and transparent pricing, and a lower overdraft/non-sufficient funds fee than the vast majority of our competitors. We are the only bank that offers a lower fee for overdrafts caused by a small dollar transaction and we waive the fee if the account is overdrawn less than $10.”

On a $50 overdraft item, the average overdraft fee is currently $33.70 at the 10 largest banks in the country. Bank of America, Wells Fargo, TD Bank, Capital One and BB&T charge a flat $35 overdraft fee. U.S. Bank is the fifth-largest bank with 17.4 million customers and $231 billion in deposits.

Also, U.S. Bank sets a maximum of three overdraft items paid and three overdraft items returned, a total of six overdrafts, per day.

“We offer effective tools to help customers track their balances, with email and mobile balance alerts, and we make it easy to transfer funds from a savings or other account to avoid encountering a negative balance,” Chaset added.

Other changes to fees will be rolled out later this year.

Overdrafts return to the spotlight

In August 2010, new laws required banks to obtain customer consent to process a debit transaction or ATM withdrawal that will result in a balance below $0 — and an overdraft fee. Without an opt-in, the transaction is denied and there is no overdraft fee.

The impact to the banking industry’s bottom line is apparent. Last year, financial institutions generated $31.6 billion in overdraft fee revenue, down from $33.1 billion in 2010 (a 4.5 percent drop), according to financial-research firm Moebs Service.

Still, lawmakers and consumer advocates are not satisfied with the current state of overdraft policies.

Last week, Rep. Carolyn Maloney (D-NY) proposed a new bill, called the Overdraft Protection Act, to further regulate overdraft policies. The bill calls for fair overdraft fee pricing, limits to the number of overdraft charges and a ban on transaction manipulation to maximize the potential of fees.

These provisions encompass the recommendations resulting from a recent consumer study by Pew’s Safe Checking in the Electronic Age Project, which aims to restore transparency and fairness to checking accounts.

U.S. Bank Reviews Fee Structure, Will Increase Overdraft Fees

Sasha Kimel/flickr source

JP Morgan Chase CEO Jamie Dimon frequently boasts about what he calls his fortress balance sheet — an impenetrable wall of well-hedged risk. But after a $2 billion trading loss stemming from a derivatives bet made in the bank’s London office, he may have to admit that his strategy isn’t quite as failsafe as he would like to think. More importantly, the law that is designed to prevent this sort of thing from happening to depository institutions, the Volcker rule, might be too weak to do its job.

The bank’s Chief Investment Office, in London, lost $2 billion under somewhat vague circumstances. It appears the CIO, in an apparent attempt to hedge the costs of one position in credit default swaps — the position itself a hedge against credit risk on another position in risky bonds — issued credit default swaps of its own on safer investments in order to generate revenue, and the position went south. Not only does this strike at the heart of Dimon’s strategy for his bank, but it is also reminiscent of the events of 2008, when banks had massive and supposedly unforseeable risk on their balance sheets — balance sheets that had been designed, in theory, to mitigate risk.

Will the Volcker rule, when it is finally implemented, do anything to prevent governmentally-backstopped institutions like JPM Chase from making American taxpayers essentially assume its risk? Occupy the SEC says no. The organization, an offshoot of the Occupy Wall Street movement (which MyBankTracker spoke with a few months ago), submitted a detailed and thorough letter to the SEC earlier this year about the proposed version of the Volcker rule, highlighting the various loopholes that banks can — and they believe, will — exploit in order to continue to take risky positions with depositors’ funds. We spoke with Akshat Tewary of Occupy the SEC to find out why the organization believes JPM’s trading loss illuminates the problems inherent in Volcker.

JPM’s $2 billion trading loss, said Tewary, “highlights what banks will do to get around the rule.” The CIO, he said is “guised as some sort of risk-mitigation office,” not a fund that seeks profit through taking on risk of its own. The Volcker rule in its current form, he said, has all sorts of exceptions to the proprietary trading ban, including market-making and hedging, both of which are massive loopholes that could potentially be exploited.

It “opens up the opportunity for banks to say ‘I’m hedging here’ — but it’s not a hedge,” said Tewary. The CIO was selling insurance on a credit index fund — that’s not a hedge on any particular position, said Tewary. Indeed, commentators are suggesting the position was taken to boost revenue, not hedge credit risk.

JPM will be able to, in the future, take on substantial amounts of risk under the guises of hedging risk.

One might reasonably suspect that Dimon had to face the music at a JPM shareholders’ meeting in Tampa on Tuesday, but that was not the case: shareholders not only approved Dimon’s compensation package, they also voted down a proposal that would have cut back on his duties at the bank by splitting the CEO position from the Chairman position, reports ABC News. But not everyone is happy with Dimon.

Elizabeth Warren, financial regulation crusader and candidate for U.S. Senator in Massachussets, has called for Dimon to step down from his position at the New York Fed, according to Bloomberg. Dimon, as a member of the Federal Reserve Board of New York, is essentially regualting his own industry, which is not so much a conflict of interest as much as outright regulatory capture. Senator Bernie Sanders has echoed Warren’s concerns, reports Bloomberg.

All this brings us back to the same problem: banks cannot necessarily be trusted to regulate themselves. For all the whining the industry does over the Dodd-Frank Act, it still has a great deal of control over how it conducts its business.

JPM’s Trading Loss Highlights Regulatory Issues, Occupy Group Says

bclinesmith / Flickr source

Citizens Bank and Charter One will let customers move their money through person-to-person (P2P) payments and external account transfers — services that come with fees attached. Both banks are owned by RBS Citizens Financial. 

“People are busier than ever, and we are committed to putting our customers in control and showing them how to take care of their banking needs anytime and anywhere,” said Brad Conner, vice chairman of consumer banking at RBS Citizens Financial Group, in a press statement.

Citizens Bank and Charter One customers can now send money to anyone with an email address, mobile phone number or bank account number. The P2P service is powered by Popmoney, which also powers P2P payments for major banks including Citibank and Ally Bank. Citizens Bank and Charter One charge $1 per standard 3-day payment and $10 for next-day service.

Additionally, customers can now initiate next-day fund transfers to external accounts. Previously, customers outgoing transfers to an external account took effect within three days, said Jim Hughes, a Citizens Bank spokesperson, in an email. The fees for external account-to-account transfers are $3 for regular service and $10 for next-day service.

Outgoing transfer fees are common — Bank of America and Chase charge similar fees. To avoid these fees, customers can request incoming transfers, which are usually free, from the external bank.

Currently, Popmoney is only available via online banking. “We plan to add Popmoney functionality to mobile banking later this year,” said Hughes added.

External account-to-account transfers are available through online banking and mobile apps.

According to RBS Citizens, Citizens Bank and Chart One iPhone applications were accessed more than 12 million times in 2011. Their Android apps launched earlier this month.

The Providence, R.I.-based RBS Citizens is the 15th-largest bank in the U.S. by assets, according to SNL Financial.

RBS Citizens Releases P2P Payments, External Account Transfers

New or recent college grads may want to brush up on how their student loan debt can influence their credit score.

According to a survey conducted by the Consumer Federation of America (CFA) and credit scoring company VantageScore Solutions, only 58% of young adults (18-35) correctly identified the factors related to student loans that can have an impact on their scores.

These young adults especially don’t realize that “just taking on the debt will depress their score,” says Stephen Brobeck, executive director of the CFA.

High levels of unpaid debt can have a negative impact on a person’s credit score, regardless of whether they consistently pay their bills on time, because many lenders believe it will be much harder for that person to make payments on a new loan.

The potential red flag can delay a young adult’s ability to take out a mortgage or car loan. It could alternately lead to higher interest rates on these types of financing. The added expense then makes it harder for young adults to make all their payments on time and can lead to further credit score woes, Brobeck says.

Exacerbating the problem is the fact that student loan debt is currently at an all-time high. The Consumer Financial Protection Bureau found private and federal student loan debt collectively topped the $1 trillion mark in March.

“Some of these debt loads coming out of college are pretty attention-getting,” Barrett Burns, President and CEO, VantageScore Solutions, says “The financial toll placed on students cannot be overstated.”

Burns says it’s important that students and their guarantors understand the true ramifications of their total projected debts, including the impact it can have on their scores and their ability to pay other bills. He also says, in order to improve scores, young adults should focus on paying bills on time, keep balances low and avoid taking on unnecessary loans.

The survey findings were part of an annual study on consumer knowledge concerning credit scores. Results are based off of telephone interviews with over 1,000 Americans conducted in late April 2012.

Smarter, but not smart enough

“The good news is, consumers know more than they did in 2011,” Brobeck says.

For example, 75% of participants knew the three major credit bureaus – Experian, Equifax and Trans Union – were responsible for compiling their credit report. A majority of consumers also understood new consumer protections regarding credit score disclosures.

Still, there are categories in which “significant minorities [of participants] answered incorrectly,” Brobeck says. These areas include a misunderstanding of how credit card inquiries impact scores and the false belief a person’s age, ethnicity or marital status is factored into a score.

The survey also found, while 78% of consumers understand they have more than one generic score, they don’t always know which one they are looking at.

“It’s critical to understand what score is being used,” Brobeck says. A good FICO score, for instance, isn’t necessarily a good VantageScore since the two popular models follow ranges of 300 to 850 and 500 to 990, respectively.

What Young Adults Still Don’t Know About Credit Scores

American Express card members can now receive daily deals, sent via the company’s iPhone application and based on purchase history and location. Initially, the deals program will be in pilot mode with offers concentrated in New York and Los Angeles.

Launched Monday afternoon, the “My Offers” feature competes with the likes of Groupon and LivingSocial — the largest players in the daily deals market — but without the hassle of having to purchase a coupon, and returning it when doesn’t get redeemed.

“In an increasingly crowded marketplace, where consumers are bombarded with daily deals, we saw an opportunity to help our Cardmembers save time as well as money by curating meaningful offers for them,” said Josh Silverman, president of the U.S. consumer services group at American Express, in prepared remarks.

Cardmembers can view their list of personalized deals through the American Express app and have offers linked to an American Express card.

For example, one offer is a $5 statement credit for spending $10 or more at a Dunkin Donuts.

Selected offers will be saved in a list that can be sorted by relevance, location or expiration date. By using the synced American Express card at the participating merchant, the deal is automatically redeemed. My Offers records the offers that are redeemed so cardmembers can review their savings.

Statement credits should show up within 3 to 5 business days after the purchase.

“We developed our mobile offer engine with three key points of differentiation in mind: relevance, convenience and value,” Silverman added.

“My Offers” makes its debut just days after some press attention to the marketing power hidden in American Express’ data.

American Express is the largest U.S. credit card issuer by purchase volume, according to The Nilson Report.

American Express Launches Personalized Deals & Offers

You don’t necessarily need to panic the very first time you miss a monthly credit card payment. Most banks and issuers don’t report a newly delinquent customer immediately to the major credit bureaus, especially if the missed payment is out of character.

Here’s a rundown on how the major banks and credit card issuers will handle your first missed payment.

The lag time can spare a customer who inadvertently missed a bill a big blemish on their credit report. Missing a credit card payment can cause a person’s credit score to drop by 100 points or more, especially if it was high to begin with.

Of course, reporting policies vary by financial institution so it’s always a good idea to ask your issuer how a first missed payment will be handled before you actually skip one. Here’s a rundown on how the major banks and credit card issuers handle their customers’ first missed payments.

Chase: Chase defines a delinquent account as an account that is 60 days from the bill date. As such, the bank reports delinquent accounts 61 days past the first missed payment’s billing date.

Capital One: The bank only reports an account as delinquent if it is at least 30 days past due, so customers are essentially given one billing cycle to make good. The bank says it may also choose to waive the $25 first missed payment fee for good customers or one-time offenders.

Bank of America: An account that falls one payment past due is not reported to the credit bureaus.  Instead, the delinquency is reported once the customer misses two consecutive payments.

American Express: Amex generally does not report a first missed payment to the credit bureaus. Cardholders need to pay their next bill by the next due date in order to avoid having the account reported as delinquent.

Discover:  A spokeswoman for Discover says the issuer’s policy is that it may report any missed payments to the credit bureaus.

Wells Fargo: Customers have at least 25 days to make their payment once a billing cycle closes. If they don’t meet this timeframe, the account will accrue interest as outlined in the terms and conditions of their credit card agreement. The missed payment is not reported to the credit bureaus until the account is 30 days delinquent.

A Wells Fargo spokesperson says customers who miss payments due to financial hardship should contact the bank as soon as possible. Depending on the nature of the hardship, they may be willing to work with the customer as they try to catch up on their payments.

Remember, these policies typically only apply to a first missed payment by previously reliable customers. Cardholders who miss a payment, shore up their account, then miss a payment again, should expect to see an effect on their credit score.

Note: Citi did not respond to frequent request for comment.

How Credit Card Issuers Respond the First Time You Miss a Payment

Victory & Reseda/Flickr source

Financial institutions have teams to monitor conversation surrounding their brand on news sites, blogs and especially social networks due to the incredible amount of negative press they receive. In an age when consumers are generally unhappy with the banking world, banks need constant vigilance. Corporate Insight, a financial services consulting firm, believes that banks can use Pinterest to promote their brand. But putting a bank on Pinterest is like trying to force a conversation between your mom and your banker — about cupcakes.

Pinterest is a site that has been taken over by upper middle class, middle-aged women to share pictures of cats, shoes and homemaking projects. It is the third-largest social network, and it gained over 10 million users more rapidly than any site ever before. This is largely due to its rapid sharing and picture pinning appeal, and many brands, such as Whole Foods or Nordstroms, effectively utilize this platform to their advantage. However I don’t remember any bank wowing the public (or even impressing them) with their online social presence.

In fact, banks get tongue lashings all over the web, including many in our bank reviews section, for poor service, outrageous fees or simply bad performance. Banks already lack proactive responses to these and other avenues that funnel negative feedback such as Facebook and Twitter. Where is there space on Pinterest for banks to promote intangible products like a checking account or even a credit card?

Corporate Insight insists a powerful presence could includes pictures of seven different banking aspects:

1. Retirement
2. Savings and investment goals
3. Credit card rewards
4. Lifestyle such as sponsored events and other partner venues
5. Corporate Mascots
6. Contests such as offering rewards with the most likes or repins
7. Charitable Giving

Really? An entire page for a corporate mascot? Which banks even have corporate mascots? Okay a bunch, but few mascots if any directly affect the brand or are recognizably related. (The KeyBank Key is the perfect example of why banks don’t need and should avoid mascots.)

While the web has come to privilege pictures and videos over text, the banking industry still lacks a hook in this arena despite the above assertion from Corporate Insight.

Which is likely why banks are essentially nonexistent on Pinterest as of now. Very few have posted anything, and the few that have pinned treat Pinterest like a storage portfolio. For example, State Bank & Trust, located in Macon, Georgia pinned some TV spots and and tagline posters. State Bank & Trust in Fargo, ND, just has three empty boards entitled “Dream Car,” “Dream Home” and “For the Home.” TD Bank and Standard Bank have claimed their Pinterest pages to protect them from getting stolen, but have not pinned anything.

The space for banks on Pinterest is limited at best. And who’s to say consumers will not utilize it to simply hate on their bank when something goes wrong? For now, they should just stick to ignoring my furious tweets about my defective mobile check deposit.

Banks and Pinterest Go Together Like Lamb and Tuna Fish