According to a recent survey, 46% of Americans are not worried about having cash in their wallet because they prefer other forms of payment. A little more than half of Americans (53%) claim they try to have cash on hand just in case, which continues to fall year after year. The numbers for young adults, not surprisingly, is even less. This trend is likely to mean more and more vendors will minimize options to pay in cash and will encourage consumers to pay through other methods. In fact, 30% of adults, according to Pew Research, make no cash purchases at all in a given week.
Why does this matter? It may not for most of the population, but it does bring up a social issue for the unbanked population. Vivi Holdings announced results of a survey they commissioned from Pew Research that polled the unbanked population. The contrast between the wider population and the unbanked is dramatic as they are heavily reliant on cashing paychecks and thus paying by cash.
The survey polled 250 people without bank accounts, and 41.8% still receive their income by paper check or money order. They are heavily reliant on cash checking stores and other places such as grocery stores that have a similar service. The effect it has as these services grow in cost is like an involuntary lottery in that it is essentially a financial burden on the people that cannot afford it. More than half the people surveyed, according to Vivi Holdings, stated that more than half of the unbanked “spend between $20 and $40 when cashing a check.” That can mean several hundred dollars of an already below poverty line salary per month goes to these vendors.
Marco Scabia, Global President of ViViPAY stated, “We’re going to offer virtual bank-like services without the need for a traditional bank account, so people can make online purchases, as well as transfer money, pay bills, and deposit money, all tied to a ViVi Mastercard or Visa.” The company is seeking to develop financial solutions for the entire population, and thus bypassing the sharks that charge these types of fees to the marginalized.
Banks protest that services like this can also bypass some of the regulations that they are subject to from government regulations. However, it is fair to say that banks need to concentrate on solutions such as these to be competitive as technology solutions grow.
Companies that offer services to communities in the margins are providing a need in society that the banks can also try to service. Once a company like this has a customer, if that customer grows in income there is no guarantee the customer will cross over to a traditional bank account. They now have a customer, and can grow services while the customer may grow as well.
Companies such as these can aggregate the branches of technology, telecommunications and payment processing in one platform. Banks can actually do the same, if they choose. It is already becoming part of the digital transition for the banking industry.
- Online Banking Experience the Key to Consumer Satisfaction, Claims New Survey
- The Robots Aren’t Coming: They’re Already Here (and Ripping Off Banks)
- As Banking Model Is Upended, CEOs Can Step Into the Dance of Disruption
- TIAA CD Offers Guaranteed Preservation Of Capital With Investment Upside
- Education Loans: A Relationship To Bank On