Thursday, November 20, 2014

Converting Credit Card Available Balances to Cash and Sidestepping FI Usury

When consumers travel by public conveyance they become captives. Moreover, long haul travelers become easy prey for diabolical payment architects blatantly blurring the lines between debit and credit payment applications.  

Consider the ubiquitous embedded screens on the seat backs of jumbo jets and place them on all modes of transportation where passengers wait patiently for their journeys to end. Next consider optional ticket prices to include cash available to gamble, access proprietary content (maybe not actually used), pay for contingent travel (such as discounted hotels if circumstances interrupt a trip) or other similar amenities. If the option includes winning money (not necessarily by gambling, but by contests, refunds, or a host of such promotional items) then effectively $x charged to a credit card becomes $x - $y where $y is cash received back by the consumer.

The cash strapped traveler may use their credit limit to access ready cash at a discount and the conveyance providers may well get the use of a generous float if weary travelers do not stop at a Kiosk to get their cash back but let it ride until their next trip. Further the conveyance providers have a source of data that shows what their custom want to do to wile away the hours.  The losers of course are financial institutions (FI) that get less money than they would otherwise for a cash advance on a credit card.

Providing cash to credit cardholders is not just for the travel industry. It is possible for inspired entrepreneurs to provide a cash delivery service to credit card customers.  The cash strapped consumer gives the credit card number to the delivery company that initiates a request for the cash, the card not present (CNP) fee, and a fee for the service. Once again all are happy except the FI that may complain that it violates card acceptance agreements somewhere way down in the small print.

There are many such ways to wring cash from credit cards without the regular FI fees and perhaps now there are certain unscrupulous merchants that ring up a sale, only to give the majority of the value back to their custom. There is likely an economic model that gives a price point for the cheap loan service including covering the risk that the evil merchant takes if discovery means the inconvenience of changing their merchant number or some other ruse. These after all are desperate times for a middle class under siege.

Next Blog: Bad Ed II: new filters for a new era of fraud

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