This week we dig into Amazon’s new subprime card, the Taxpayer First Act, and UBER’s latest banking offering.

US Core CPI rose by 2% YoY in May, just at the Fed’s target rate but below economists’ expectations. Consistently low inflation is boosting calls for a rate cut next week. The market is pricing in a 24% probability of a rate cut next week and a 76% probability of a rate cut in September.

Source: Bloomberg, PeerIQ

In regulatory news, the Senate passed the Taxpayer First Act which contains provisions designed to modernize the IRS, in areas such as customer service, taxpayer rights during the enforcement process, information technology, identity theft protection and electronic systems. A key provision relates to the modernization of the Income Verification Express Service (IVES) program that requires the IRS to implement a fully automated program for disclosing taxpayer information for third-party income verification. The bill sought after for years, enables lenders to access a summary of a potential borrower’s prior year tax return in real time.

Congress is considering legislation that would allow employers to contribute $5,250 per year tax-free towards employees’ student debt repayment. Student debt has ballooned to $1.6 Tn and is hampering access to credit and reducing retirement savings.

Amazon Launches Subprime Credit Card

Amazon has partnered with Synchrony bank to launch Amazon Credit Builder, a store card for consumers with poor credit history. These consumers would likely not be eligible for Amazon’s store cards, also offered by Synchrony, and would be prompted to apply for the Credit Builder program. The card is a secured credit card where borrowers need to deposit money upfront to obtain a credit line. They can then “graduate” to Synchrony’s regular store cards after demonstrating a history of payments.

We discussed last week how banks were wary of partnering with technology companies to offer lending products. Synchrony and Amazon seem to have further solidified their relationship with this product offering.
Meanwhile, is Uber getting into banking? Uber is making a push into Fintech to focus on payments, bank accounts and providing financial services for drivers and contractors. Uber already operates the Uber Cash app and has a credit card issued with Barclays.

Internet Trends Report 2019

Kleiner Perkins’ Internet Trends Report for 2019 is out. The report delves into e-commerce, education, immigration and healthcare among other topics. Despite, Kleiner Perkins activity in lending startups – LendingClub, Brex, Better – apart from a comment on Square, there were no slides in the 339 slide deck discussing digital lending trends. Maybe that is the headline? That said, the deck did wrap up with a survey of WeChat and other payments firms’ trends that are growing their lending offerings.

PeerIQ’s Consumer Credit Digest

PeerIQ’s Consumer Credit Digest allows users to track trends in each major asset class including Credit Availability, Credit Health, and Performance Analysis via an affordable monthly publication. The Digest is derived from TransUnion data.

Do reach out to learn more about our Consumer Credit Digest!

Industry Update:

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