There are more than 1 billion bank-issued cards in the United States – more than 500 million debit, 600 million credit, 50 million reloadable prepaid, 100 million private label, including store, gas and retail – and yet there are more than 37 million Americans that are classified as “unbanked” and do not possess a traditional checking account. These consumers are technically not unbanked because they possess, on average, three to four bank-issued card accounts. They have a bank account, just not a traditional savings or checking account.
The question remains is how are these consumers paying bills on plastic if they don’t maintain a traditional checking account?
“Unbanked” consumers are restricted to paying bills by waiting in lines to fill out code-specific forms in cash payment centers found in retail stores, or by waiting for their payment to arrive via mail through purchasing a money order or certified check. Traditional checking account customers spend minimal time visiting their financial institution or logging online to handle their financial needs. There are no forms, no codes and no calls to process their desired payments, plus their visit might even end with a lollipop.
How can financial institutions, retail stores and card issuers offer quick and convenient financial services for the “unbanked” and “underbanked” consumers to match those of the banked?
According to NerdWallet, as of November 2012 the average U.S. household hovered around $7,117 in credit card debt. And surprisingly, more than 40 million credit card bills were paid with cash last year. The typical “unbanked” consumer must get creative to turn that cash into a viable solution to pay bills or load money onto their multiple forms of plastic.
Transforming an ordinary point-of-sale (POS) terminal into a payment center would help revolutionize the way the “unbanked” or cash-preferred pay their credit card bills. Credit cards, and especially retail store-issued credit cards, must have accessible and cost-effective methods for consumers to make cash payments. Increasing the locations of payment acceptance for plastic will increase card utilization, customer loyalty and foot traffic – a win for the consumer, retailer and card issuer – and also differentiate the retail store from its competitor by offering such an opportunity.
Credit card payments must be seamlessly integrated into the average, on-the-go American lifestyle. A quick, premeditated trip to the drug store can offer a consumer more than just their drug store needs. A POS that is capable of accepting and processing cash as a credit card payment will allow anyone with a plastic card – banked or unbanked – to add cash to their card account quickly and conveniently. The added benefit of not having to increase inventory and additional costly infrastructure, will increase store revenue and repeat customer visits.
Mobile, online and retail banking are changing the ways consumers purchase and conduct financial transactions; shouldn’t all parties have the opportunity to benefit from this new era of banking?
Dave Wilkes is founder and CEO of Salt Lake City, Utah-based Fuze Network, a payments technology company that has “fuzed” together existing payment networks enabling cardholders to send money to any card. He can be reached at dave@fuzenetwork.com or at 888.389.3832.
