ACH Processors are shutting down licensed operators too
ACH Processors are shutting down licensed operators too
Many of you know there have been some recent ACH payment processor problems that have developed in our industry. In particular, online operators are being hit the hardest. I had (2) clients check in with me this morning regarding the shutdown of their ACH capabilities.
I was surprised to see them shutdown, as clients of CAB Consulting are licensed businesses. It has been my understanding that only unlicensed and unregulated online payday loan companies were the targets of these shutdowns, not compliant and legal licensed operators. It appears ACH companies are having a knee-jerk response and are suspending services first, then asking questions later.
If you have been impacted by this, there are some options in the market that I can tell you about. Also, check in with your ACH provider to to make sure you are informed about where things are now, and to avoid being blindsided.
Contact Michael Brown at CAB Consulting, 214-293-8676, or Michael@CreditAccessBusiness.com.
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Bank Fees are rising and so is use of Alternative Financial Services – coincidence?
Bank Fees are rising and so is use of Alternative Financial Services – coincidence?
I was reading this CNN Money.com article today: http://money.cnn.com/2012/08/13/pf/bank-fees-rise/index.html
This is an issue that I am very familiar with and the result is more customers for Texas Credit Access Businesses.
Monthly service fees on accounts with balances below $5,000 are the banks targets for the monthly service charges, which certainly fits the low and middle income profile of the typical payday consumer. And, don’t forget that NSF and Overdraft fees at many banks are have drifted up into the $35-$40 range.
Options like pre-paid debit cards are becoming more attractive compared to the bank branch, and in many cases the pre-paid cards offer more ideal online account management and smart phone capability, all with lower monthly service charges.
Consumers are learning there are more convenient and less costly options out there, and a migration towards cutting edge alternative financial services is happening. Shape your business accordingly, get creative, and stay convenient!
I refer to the information below very often in conversations – it is published by FISCA and illustrates the real deal on banking related charges versus payday advances – the APRs are less in many cases! Be sure and have these statistics ready the next time the APR topic comes up – and then nail it.
$100 Payday Loan (14 days) = $22.88 Fee (596% APR)
$100 Overdraft Protection = $29.00 Fee (756% APR)
$100 Bounced Check = $54.87 Fees (1,431% APR)
Sources:
(1) Bankrate.com, 2007 Courtesy Overdraft Study – based on average first draft
(2) Average NSF fee $28.23 (Bankrate.com, 2007 Checking Study), based on average first NSF charge, and average merchant return check fee of $26.64 (2006 CFSA fee survey).
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Legislative Session: (3) bills as of last week, this is the 4th
Legislative Session: (3) bills as of last week, this is the 4th
New bill: HB 877, from Chris Turner (Democrat out of Tarrant County, Represents Grand Prairie & portions of Arlington).
Caption: Relating to prohibiting certain telemarketing calls by a credit access business.
A credit access business or a representative of a credit access business may not make a telemarketing call, as defined by Section 304.002, Business & Commerce Code, to a consumer whose name and telephone number are on the Texas no-call list maintained under Subchapter B, Chapter 304, Business & Commerce Code.
The full text of the proposed bill mentions that you would be able to contact consumers with whom you have had done business with in the past, so long as it has not been more than 1 year since the last transaction.
Comments: Our clients and Members to not typically “telemarket” or use outside telemarketing firms. We are not aware of many CABs who do this but would be interested to see how “telemarketing” is defined. Stands to reason that if someone has asked not to be telemarketed to that they are not telemarketed to. Not sure why it is worth the effort to put this bill out.
This blog post was written by Michael Brown, President of CAB Consulting and the Texas Organization of Financial Service Centers. He can be reached at 214-293-8676, or Michael@CreditAccessBusiness.com.
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The infamous and continuously failing Texas Payday Loan City Ordinance.
The infamous and continuously failing Texas Payday Loan City Ordinance.
Since Texas cities began passing the infamous and continuously failing Texas Payday Loan City Ordinance there has been a decrease of 1,300 or so licensed locations inside the State. According to the most recent OCCC licensee totals, this represents a 37% market shrink. The results have been a shuttering of businesses in Texas, a loss of thousands jobs, a loss of real estate rents, and decrease in property tax revenues. Rates have increased 12% in Ordinance cities and demand for unsecured short term credit has largely remained the same. This is a cold hard truth that was laid out in City Council meetings when we were asking for a “No” vote on the Ordinance. Is an “I told you so” in order here?
2017 has been a rough year for the Ordinance though, many cities are now bucking the trend and have voted the Ordinance down. As well, the City of Austin got the double slam-dunk in their simultaneous loss to Speedy Cash and Advance America City Ordinance lawsuits in April. Those two cases were around a year in the making I wonder if the taxpayers of Austin feel good about the time and expense the City put into an issue that results in a .000153% complaint to loan ratio for Texas residents? I live in Austin and things are tight budget-wise in this City, despite all the stories you hear about growth it has some problems that should be commanding the attention of city leadership other than the payday industry.
So here comes the next whammee – I was reading over the OCCC’s 1st quarter MSA report for 2017 and it says that 10 of the 2,200 reporting licensees generated 33% of the single payment loan volume, and get this, those 10 licensees were OUT OF STATE! As far as installment loans go in Texas, 16 OUT OF STATE licensees funded over 37% of the 271,189 installment loan and refinance transactions in the 1st quarter of 2017. Yes, these are out of state online lending companies who are licensed to do business in Texas but are not within the jurisdiction of any City. That makes them free to let the market decide and boy did the market ever decide. On either of the products mentioned – the out of state licensee group was the largest “market” in Texas. The next biggest markets down were Houston and Dallas but it wasn’t even close to the out of state operators. Check out the report for yourself below.
Here is a link to the MSA report: http://occc.texas.gov/sites/default/files/uploads/reports/cab-q1-msa-2017.pdf
Imagine if the Payday Loan City ordinance did not force the closure of all of those locations in Texas! All of that businss would be taking place here in Texas. Kudos to the online guys who are meeting the need but for obvious reasons we need to work to get those customers back! I bet the OCCC wishes they had that extra $800,000 per year in licensing revenue. And how about that $300,000 per year in contributions to the Texas Educational Endowment fund that is now lost?
The full ugliness of the Payday Loan City Ordinance is now beginning to show in the light. Please pass this information along to your City Council the next time this issue comes up in your market – we are positioned to deliver the facts to them quickly and efficiently so that they can have the full story and move on to the next issue which will be much more meaningful, no doubt!
This blog post was written by Michael Brown, President of CAB Consulting and the Texas Organization of Financial Service Centers. He can be reached at 214-293-8676, or Michael@CreditAccessBusiness.com.
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