The Data Dive: The Week In Reversals, Rewards And Rebuffing Warren Buffett

3. June 2018.








Reversals, no matter how surprising, are always possible.

On June 4, 1949 – 78 years ago today – the miracle at Dunkirk was completed, despite the fact that at the time, reversing the tide of war and rescuing the nearly 400,000 trapped British troops seemed like an impossibility.

And while the first week of June in 2018 (thankfully) doesn’t have anything quite so dramatic going on, we did see some surprising turnarounds in payments and commerce.

Apple flipped a long-held policy in opening up the iPhone’s NFC chip to developers, Chase decided that it can afford to make its premier rewards card a bit less rewarding and Uber took a pass on an investment from Warren Buffet.

Apple Opens up NFC

It’s looking like the WWDC, which kicks off today in San Jose, California, could mark a year of big changes for Apple.

The tech company is reportedly letting third-party developers have full-access to the near-field communications (NFC) chip in the iPhone with iOS 12.

This would be a first.

The goal, according to media reports, is to make the iPhone applicable to more digital interactions, payment-related and otherwise. One oft-noted use case was the possibility that Apple’s NFC could be used to open hotel room doors, or as a virtual transit card for easier access to transportation. (Some hotel rooms can already be opened by iPhones, but that is leveraging Bluetooth technology, not NFC.)

The move to open access, according to sources, started with Apple adding the Core NFC framework, which allows apps to use the NFC chip as a scanner for RFID tags, although that feature was very limited.

By allowing third-party app developers to access its NFC chip, Apple could enable the secure storing of sensitive information.

So far, this development is still a rumor, although watchers are expecting it will be announced at WWDC along with iOS 12 and other software announcements. During last year’s developer conference, Apple made some vague noises about the chip being extended beyond a payments use case by showing an Apple Watch being synced with gym equipment.

We’ll keep you posted on what they roll out this year.

Chase’s Sapphire Rewards Rollback

As of August 26, Chase Sapphire Reserve cardholders will no longer enjoy price protection as a perk of using the card to pay. The price protection program allowed cardholders to be reimbursed for the difference if they found an item they purchased on their card offered at a lower price point somewhere else (within a certain timeframe).

Cardholders, as one might expect, were less than thrilled with the decision. Some took to Twitter.

The curtailment of price protection, Chase noted, follows last month’s announcement to cut back on the number of guests that Sapphire Reserve cardholders could bring into Priority Pass lounges. While the number was previously unlimited, there is now a cap of two guests per visit.

In addition, Chase is ending the ability to earn extra rewards on the $300 annual travel credit. The credit will remain, but customers won’t be able to earn points on it.

“We are always evaluating our products to offer a great mix of rewards, benefits and experiences that provide the most value to our customers — and those they tell us they value most. In order to do so, we may need to occasionally retire lesser used benefits,” a spokeswoman for Chase said.

The Sapphire Reserve Card also saw the initial sign-on bonus curtailed some. At launch, customers were induced with 100,000 points at sign on; that figure was cut in half last year.

According to reports, the bank ended up handing out so many perks that it caused a $200 million to $300 million hit to its earnings.

Despite the cutbacks, Chase said the card remains popular.

Trish Wexler, a JPMorgan spokeswoman, said the bank has seen renewals in excess of 90 percent, and has seen “strong retention, frequent card usage, and we’re beginning to deepen these relationships across Chase.”

Uber Rebuffs Buffett

It looks like the world almost saw an Uber Berkshire Hathaway pair-up, as Warren Buffett confirmed this week that he held talks with Uber.

Reports indicate that his company, Berkshire Hathaway, offered Uber a $3 billion investment earlier this year.

“I’m a great admirer of [Uber CEO Dara Khosrowshahi],” Buffett told CNBC. “Some of the reported details are not correct, but it’s true that Berkshire had discussions with Uber.”

Bloomberg had previously reported that Berkshire and Uber could not come to terms over the size of the deal or the size of the share Berkshire would take on. Uber reportedly tried to talk Buffett into a smaller stake.

According to reports, the deal fell through shortly after SoftBank secured its own stake in the ridesharing company late last year. That deal lowered Uber’s total valuation to around $48 billion, which is approximately 30 percent lower than the company’s earlier valuation of close to $70 billion. Last week, reports broke that Coatue Management, Altimeter and TPG were planning to buy between $400 million and $600 million in Uber stock from existing shareholders, a deal that values Uber at $62 billion.

“We are off to a terrific start in 2018,” Khosrowshahi said in a statement. “Given the size of the opportunity ahead of us and our goal of making Uber a true mobility platform, we plan to reinvest any over-performance even more aggressively this year, both in our core business as well as in big bets like Uber Eats globally.”

Uber is rumored to be heading for an IPO in the near future, and analysts think a Berkshire investment surely would have helped Uber ahead of that event.

But Uber’s IPO isn’t scheduled until next year – and it remains to be seen if the two firms have any more conversations in their future.

What did we learn this week?

Even if you’re sitting by the pool, stay connected. Apple might be looking for a way to leverage its platform. Chase might be leading the way to an overall card rewards/loyalty course correction, and never count out Warren Buffet looking for an investment opportunity.

Plenty to see here, folks.

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