Fintechs say UK credit cards restrict access to consumers’ own data

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

“The 14.5 million UK cardholders paying interest [are] lose 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, managing director of the credit card management start-up Cardeo, in a letter to the Minister of the City. Andrew Griffith sent last week.

The letter reflects the frustration of some fintechs who say that if consumers could share their complete financial data with them, they could better offer money-saving services, including personalized spending insights, ways to manage credit card debt and cheaper payment methods.

Under regulations that came into force in 2018, credit card issuers are required to allow customers to access account data online and share it with third parties, but this does not extend to information such as as the interest rates and loyalty program points contained in the monthly statements.

“When open banking was considered, the original idea was to share everything on the bank statement,” said James Vargas, managing director of credit rating fintech DirectID, referring to a framework for customers to access and share financial data with third parties. “Some banks do, but others don’t even give a PDF copy.”

Use cases for open banking include direct account-to-account payments, potentially a cheaper competitor to traditional card networks such as Mastercard and Visa, which are under intense scrutiny for charges levied on businesses, especially for cross-border transactions.

The campaign group Axes Card Tax, which includes trade bodies such as the British Retail Consortium, the Federation of Small Businesses and the Retail Charity Association, estimated that in total the system fee – which goes to networks cards – and processing fees could cost businesses in the UK £1.9billion a year.

“One of the real shames is that when open banking was launched, it was heralded as creating a golden age of competition, given everyone the opportunity to offer products to consumers,” he said. Hamish Blythe, founder of fintech Trilo, “but we’re still limited on data, which means open bank payments can’t withstand the card system.

Other uses of open banking include new forms of credit scoring, which can offer those with “light” credit records – including recent immigrants and financially excluded people – access to fairer loans. .

Gary Greenwood, analyst at Shore Capital, said: “These new fintechs are based on being able to access data, in order to improve competition. There is a risk for banks if they do not comply, they could find themselves exposed [to regulatory action].”

In his letter, Shuker, a former MP, said NatWest and Barclaycard – which together make up around a quarter of the UK credit card market – were among the companies failing to meet data sharing requirements.

NatWest hadn’t introduced any changes after initially delaying updates until January 2022, Shuker said.

Barclays, the UK’s largest credit card provider through its Barclaycard brand, was also singled out in the letter, which said it only made limited information available to customers through third-party providers such than fintechs.

NatWest said: “We share required information with our customers when they view their credit card accounts online.”

Barclays said: “We actively participate in the open banking ecosystem, working with all authorized third-party providers and following regulatory requirements to help customers 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 help resolve any issues as quickly as possible,” they said. added.

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