What are My Options if I’m Underbanked?
Once, only nine million American families had no bank account. Now that number has segued into almost 75 million. Numerous reasons account for this lack, from high fees to hidden fees, no branches in low-income neighborhoods to customers’ lack of credit.
Lack, however, is the mother of invention. Payday loan establishments and check cashing establishments sprang up overnight, it seems, to answer the problem. There are other options, however, for the underbanked. It is these options that are making this group of people into the financial giants of tomorrow. Here’s why.
The Rise of Prepaid
When even the IRS gives refunds on a prepaid card, you know they’re here to stay. Gifts, rebates, paychecks along with almost any reason one receives money is good enough to put on a prepaid card.
There are advantages to these that make them just as good as bank cards:
- Fraud at the ATM is a thing of the past
- Lower cost per unit
- Accepted at retail as well as online
- No credit check
- No one else approves the amount you want on the card
- Trackable, just like a bank card
The use of plastic cards has grown to such an extent that it makes sense to say that everyone uses plastic at some time. A recent MasterCard study has established that by 2017 the global prepaid usage will reach an approximate $822 billion. That’s power, ladies and gentlemen.
The Rise of Mobile
The financial industry still views the underbanked as risks they don’t want to take, unpredictable and with poor credit. That the appellation only fits a few doesn’t matter to them; all the underbanked are tarred with the same brush. Hence, the rise of mobile payments.
When digital payments on mobile phones are instantaneous, and when most of the low-income people the financial industry ignores have mobile phones, then bills are paid faster and on time in addition to receiving texts with digital receipts. Research suggests that one in five Americans use their phones to access financial accounts and predicts that another 20 percent will do so in the future.
Some in the financial industry see the imbalance between the low-income bracket and the banking sector. These tend to be credit unions or other unions providing payment options with an eye toward savings in an account. Some offers include accumulating interest on their prepaid cards. Other establishments combine a check-cashing portion added to their credit union. Fees are quite a bit less with these establishments than with traditional banking institutions.
This is Where We Come In
Cash payments are another option for the underbanked which has been around since the beginning of trade. Today, kiosks in which users top off their general use prepaid cards are coming online, so to speak.
Users then pay their bills at suggested retailers either with their smartphone or their prepaid card, or they pay in cash using the company’s barcode. This barcode is texted from the business to be paid to the customer. For the underbanked or those who disdain plastic and prefer cash, this system is simple, elegant and instant. No muss, no fuss, and businesses are paid in real time.
If you are a business carrying on your books entries signifying late payments, delinquent payments or insufficient funds, then you need a solution that will not only help you but your customers as well. Clear up your books using Cashtie’s barcode. Just a few taps on the keyboard will set up payments, text or email the barcode to your customers and alert the accountants that payments will be received. Spending time growing your brand results from this simple solution.
Originally published at blog.cashtie.com.