A Programming Note

Today we will feature a guest post by my friend Andrew Grant. Andrew is a co-founder and partner at Runway LLP, and loves talking all things cards, payments, and open banking. You can find him on LinkedIn or at andrew@rnwy.group

Next week, weare off for Thanksgiving.

Before we dig into Andrew's thoughts on rule 1033, a quick note about a new card that stuck out to me this week.

Buffalo buffalo Buffalo buffalo buffalo buffalo Buffalo buffalo☨

Dmitri Borgmann

Elevations Credit Union, which I've never talked about before, announced the launch of The Go Buffs® Visa® Signature Rewards Credit Card. As far as I know, the new card is the first and only credit card that funds college athletes via the NCAA name, image, and likeness (NIL) program with every swipe.

That's right folks, not only do you earn 3% cash back on select Colorado University purchases like merchandise, the team store, the CU Book Store (but only in Boulder), home game concessions and donations to the right clubs; 2% on gas, restaurants, phone plans, streaming, and tv, but 2 cents ($0.02) per swipe and your entire $49 annual fee go directly to donations for NIL.

But wait, there's more! You also get free popcorn at home basketball and football games. (Only available while supplies last to members who present an Elevations card.)

The designs are nice if you're a huge Colorado fan (choose from black or gold). The Deion Sanders effect has finally reached credit cards, but I'm not sure what to do with it. I went to a DIII school, so I can't get too excited about college football, but while many college football cards exist with extremely specific rewards, this NIL bit is new. Wild. Just like the buffalo should be.

Maximizing Credit Card Rewards – Why Access Under 1033 Could Benefit Customers

While I assume anyone reading this newsletter is aware that the CFPB finalized its 1033 rulemaking, in case not, or if you’re unclear what it is, here’s a high-level, one-sentence overview. The 1033 rule requires “data providers”—your banks and other financial institutions—to make certain data available to an “authorized third party” (think your budgeting app) via APIs. This data is basically data from your credit cards or bank accounts (with some nuances on scope there). 

Today, most data providers do not make credit card rewards information available via APIs to third parties. But for data providers to comply with the final rule, that will change! Specifically, data providers must make (1) “rewards credits” information and (2) rewards program terms available via their “developer interfaces” to “authorized third parties.” Below, I’ll explain what that means, what it doesn’t mean, what open questions remain, and why giving consumers greater access to rewards information across credit cards makes me excited for new opportunities to better empower consumers to earn and use rewards in addition to better understanding their existing rewards programs against competitive programs. 

What do “rewards credits” and “rewards program terms” mean, and when must data providers share this information?

So, what are “rewards credits”? Good question! The CFPB doesn’t define the term, but I expect they’re what you’d anticipate – what rewards you’ve earned from a rewards program from that data provider. But the 1033 rule contains a potentially key general limitation for data sharing that may be felt more acutely with rewards credits than in other areas - data providers must only make available “covered data” the data provider can retrieve in the ordinary course of its business. This means that not all rewards information may be available; if you use a co-brand card and the rewards information resides with that partner and not the data provider, e.g., airline miles, the data provider isn’t responsible for making that information available.  

What about “rewards program terms”? That seems straightforward – the terms applicable to the rewards program. But I’m curious about its implementation.  Will it just be the actual rewards terms for a program? Will it include reward options that a consumer may opt into, e.g., this week, choose from the following ten merchants to receive additional rewards? I’d be surprised if the latter were initially included. Still, as with other components of 1033 that are not currently being provided consistently, the “consensus standard” that develops will be critical (the use of standard-setting bodies and “consensus standards” is an entirely different and interesting topic! But not – yet – for this newsletter).

Okay, when can you authorize a third party to access rewards information on your behalf (by law, at least)? Reader – it will be at least until April 1, 2026 (longer if the lawsuit challenging 1033 is successful). This is when the original set of data providers must make the information available. These are the largest data providers – depository institutions with $250B in total assets or non-depository institutions with $10B in receipts. Then follows tiered dates until April 1, 2030, when all covered data providers must make this information available through a “developer interface.” So, this will not be immediate. And, as noted above, it will not cover all rewards credits (or even rewards terms)—only those with the data provider. So, while this will not be immediate, I think it will have a profound impact on how people use and manage their rewards while also influencing what cards they sign up for and why. So, let’s discuss some possibilities that may arise!

Why is it important that I can authorize third parties to access my credit card rewards information?

In the CFPB’s words, "rewards programs information will help consumers comparison shop and use any awards they accrue optimally.” I think the CFPB is 100% correct here. Expanding access to rewards information is an important part of the larger push for consumer empowerment, including allowing them to better compare and select credit cards. 

So, how may this information do so? Here are some of my thoughts on some use cases that can meaningfully help consumers:

• Optimize Rewards Usage Across Multiple Programs. Apps could help consumers track, compare, and use rewards across different programs; provide a consolidated view of all rewards; highlight expiration dates; and recommend optional redemption options. 
• Dynamic Recommendations to Optimize Rewards Accrual. Apps could analyze spending behavior in real time and recommend the best credit card to use to maximize rewards for that transaction. Further, the app could send personalized, context-based notifications to users when shopping at a specific store or traveling.
• Automated Rewards Redemption. Users could set specific parameters for redeeming rewards, or the app could identify various optimal redemption options and allow them to choose which they prefer.  
• Rewards Value Tracking and Analysis. An app could help consumers assess the real value of their rewards by comparing redemption rates and trends in program valuations (or devaluations) and alerting users to whether their rewards programs have changed how they value rewards or how users can earn rewards. For example, the app could calculate a user’s rewards “portfolio” and provide recommendations for diversifying their rewards or getting better returns on spending for a particular class of rewards.

Some questions on what’s next?

Here are a couple of questions I have and issues I’ll be watching over the coming months and years as this provision of the 1033 rolls out:

• Will other entities, like airlines, look to make their rewards information available? As I noted above, not all rewards information may be available if, for example, the co-brand partner holds that data. Data providers for “covered data” under 1033 cannot charge for data access; this does not prohibit other entities from doing so. Obviously, providing consumers complete access to their rewards data will be most beneficial, but will we get there?
• What will the impact be on card issuers and market dynamics? This may further encourage competition and transparency in rewards. 

Overall, exciting times are ahead for open banking. And I’m sure that new ideas will emerge between now and the time data providers must make this available about how to best empower consumers to earn and use their rewards.

CardsFTW

CardsFTW, released weekly on Wednesdays, offers insights and analysis on new credit and debit card industry products for consumers and providers. CardsFTW is authored and published by Matthew Goldman and the team at Totavi, a boutique consulting firm specializing in fintech product management & marketing. We bring real operational experience that varies from the earliest days of a startup to high-growth phases and public company leadership. Visit www.totavi.com to learn more.

☨Buffalo buffalo Buffalo buffalo buffalo buffalo Buffalo buffalo