As surprising as it may seem, there are millions of American consumers who either have no relationship with a bank or only have a savings-account relationship, with no access to a checking or debit account. But a shopper without a bank account or credit card could be among a retailer’s most loyal customers.
The United States Federal Deposit Insurance Corp. (FDIC) has estimated the number of unbanked consumers to be approximately 28 million people. What is not surprising is that these same consumers have all the purchasing requirements of the fully banked consumers—and they likely have the cash in their pockets to complete a transaction.
Although conducting business the old-fashioned way, with paper currency and coins rather than plastic cards and electronic transfers, is not necessarily a negative for the merchant, it can pose hurdles for the consumer.
For instance, a survey by Opinion Research Corp. conducted in May concluded that debit- or credit-card payments were both more convenient and easier than cash. (See the news item on page 168 about consumer payment preferences for quick-pay debit or credit cards in quick-serve restaurants.)
Retailers and issuers of credit cards are stepping up to the plate to make sure that unbanked consumers have the same opportunities to use plastic that the majority of Americans enjoy. Prepaid payment cards are the hottest tickets in town, and reloadable services are enhancing the rave reviews.
Earlier this summer, Wal-Mart partnered with Visa and launched a branded prepaid, reloadable debit card targeted specifically to its customers without bank accounts (
Last month, MasterCard announced an agreement with Los Angeles-based Green Dot Corp. to expand the ability of consumers to reload the branded rePower MasterCard through the Green Dot network of more than 40,000 retail locations nationwide, including Wal-Mart, CVS, Walgreens, Rite Aid and RadioShack.
Green Dot, which has similar agreements with Visa and Discover, also offers a cash-processing service, MoneyPak, that allows consumers to load cash to prepaid cards, use cash to pay bills and add cash to a variety of accounts.
At retailers such as St. Louis-based Save-A-Lot, a large percentage of customers do not use conventional banking m