Fintechs say UK credit cards are restricting access to consumers’ own data

Fintechs in the UK have accused credit card issuers like NatWest and Barclays of “costing consumers millions” by not giving full access to their own data.

“Britain’s 14.5 million interest-paying cardholders [are] Losing millions if not billions of pounds a year at a time when their finances are already crippled by the cost of living crisis,” said Gavin Shuker, chief executive of credit card management startup Cardeo, in a letter to City Secretary Andrew Griffith sent recently Week.

The letter reflects the frustration of some fintechs, who argue that if consumers could give them their full financial details, they could offer better money-saving services, including personalized spending information, credit card debt management options and cheaper payment methods.

Under regulations that came into force in 2018, credit card issuers are required to allow customers to access and share online account information with third parties. However, this does not apply to information such as interest rates and loyalty points, which are included in monthly bank statements.

“When open banking was envisioned, the original idea was to share everything on the bank statement,” said James Vargas, chief executive of credit scoring fintech DirectID, referring to a framework that allows customers to access and track financial data to share with third parties. “Some banks do, but others still don’t even give out a PDF copy.”

Use cases for open banking include direct account-to-account payments, potentially a cheaper competitor to traditional card networks like Mastercard and Visa, which are under scrutiny for the fees charged by businesses, particularly for cross-border transactions.

Campaign group Ax the Card Tax, which includes trade organizations such as the British Retail Consortium, the Federation of Small Businesses and the Retail Charity Association, estimated that scheme fees – which go to card networks – and processing fees could cost businesses in the UK £1.9bn in total .£ annually.

“A real shame is that the launch of open banking ushered in a golden age of competition, where everyone has the opportunity to offer products to consumers,” said Hamish Blythe, founder of fintech Trilo, “but we’re still on the data is restricted, which means that open banking payments cannot withstand the card system.”

Other applications for open banking include new forms of credit scoring that can offer those with “thin” credit records – including recent immigrants and the financially excluded – access to fairer lending.

Gary Greenwood, analyst at Shore Capital, said: “These new fintechs are built on having access to data to improve competition. There is a risk for banks if they don’t comply, they could be put at risk [to regulatory action].”

In his letter, Shuker, a former MP, said NatWest and Barclaycard – which together make up about a quarter of the UK credit card market – were among the firms that failed to comply with data sharing requirements.

NatWest has failed to roll out changes after originally pushing updates to January 2022, Shuker said.

Barclays, Britain’s largest credit card issuer through its Barclaycard brand, was also singled out in the letter for providing limited information to customers about third-party providers such as fintechs.

NatWest said, “We provide the required information to our customers when they view their credit card accounts online.”

Barclays said, “We actively participate in the open banking ecosystem, partnering with all authorized third-party providers and following regulatory requirements to help clients get the most out of their finances.”

“We have many online resources to help developers build, test and launch new open banking services with Barclays, as well as a dedicated support center to resolve issues as quickly as possible,” they added . Fintechs say UK credit cards are restricting access to consumers’ own data

Adam Bradshaw

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