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New Technology for the Unbanked

New Technology for the Unbanked

With millions of Americans now considered “unbanked” or “underbanked”, a new option is opening up in the form of the digital wallet. This new technology is already in the testing phase with at least one payments processing company.


Named “FlipMoney”, this is an app users download onto their smartphones and is linked to their prepaid debit card – though users can link as many other accounts they wish, as well. It’s a long overdue convenience, says PreCash CEO Steve Taylor. PreCash is the company that’s pushing the technology through.

Historically, people with the least amount of money and free time pay more and have fewer convenient options to do simple things like pay bills or cash checks,

said Taylor said. If he as his way, that shift will be occurring sooner rather than later.

Gone Hi Tech

There’s no denying the market, especially considering 20% of all American households have no access to traditional bank products. This, according to FDIC, is a number that will likely continue to grow for some time as the effects of the recent recession begin to fade. For contrast, consider this: in 2009, 7.7%, or about 9 million households, were unbanked.

So what can this new wallet do? Users will have the option of direct depositing checks via their cells (provided they have the app), accessing their money and even a complimentary expedited bill payment option for utilities, credit card companies and even their rent. This is an especially attractive feature since prepaid debit cards are notorious for their high fee structures. So dedicated is Taylor that he says the odds are routinely stacked against those having the hardest times.

A person making $30,000 or less a year should be able to pay bills or get paychecks just as easily as someone who makes millions,

Taylor said. That’s not to say, of course, there won’t be fees. As of this writing, the fee structure is similar to its competitors, including an activation fee of $3, a monthly $5 fee and ATM charges of $2 each. That said, peer to peer transfers are free, which is often not an option with other prepaid debit cards.


So why are so many Americans unbanked and why are the numbers on the rise? It’s actually a simply explanation – with so many families struggling with unemployment, health care costs and rising food costs, so many found themselves overdrawn with their banks. When they were unable to cover the bounced check fees and merchant fees, they were forced to abandon their accounts, which landed them in a database that alerted banks anytime consumers tried to open new accounts. As the recession worsened and unemployment grew, the number of Americans who had no access to those bank products grew too.

Still, and despite the growing number of unbanked, there are certain demographics associated with the numbers. Young and lower income households, those who are unemployed and minorities are often the ones without bank accounts – either checking or savings. The numbers come to 21% for black households and 22% for non citizens. 24% of those who are unemployed are also unbanked as is 28% of households that earn less than $15,000.

There’s a difference in “unbanked” and “underbanked”, too. This is important because the numbers tend to vary significantly. The underbanked are those who might have traditional checking accounts but who can’t use them at times, either because of NSF charges, fears that any money they deposit will be taken by the bank to pay overdue loans or some say they are unable to maintain minimum balances. The unbanked are those with no access at all to checking and/or savings accounts. One in five households in the U.S. is considered underbanked, compared to 18% in 2009.

Introducing mobile and smartphones into the mix is a natural progression. 91% of under – or unbanked Americans own cells and 57% own smartphones. The right app at the right time targeted to the right consumers is a win win all the way around. With so many with continued struggles – it’s definitely perfect timing.

There’s one more important dynamic in this news. More than 30% of Americans now feel they are lower class from a financial perspective. That number is up, too. A report released earlier this week by the Pew Research Center revealed a growing number of Americans who are considering bankruptcy and more than a few of those people say if they do, it will include NSF fees a bank has assessed against them. They can’t file bankruptcy on student loans (another growing problem in the U.S.), so including everything else becomes especially important for those with student loans. Along with bank fees (when it’s allowed – laws vary by state), they say credit card debt is another reason they’re considering bankruptcy as a solution.

Are you underbanked or unbanked? Share your story with us – we want to hear what you have to say. Would you feel safe conducting business via your smartphone?

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