“If you think about what prepaid can do, it can help bridge the gap between the cash economy and the financial mainstream with a product that offers transparency, quality and value.”
These were the words of former U.S. President Bill Clinton at last year’s Prepaid Expo and I think they underscore the importance of financial inclusion.
Often being unbanked or underbanked is a choice due to the affordability of banking services, credit issues, convenience, and distrust of the financial system. Yesterday at the Federal Reserve Bank of Chicago’s Reaching New Markets conference, I spoke about how many of our products and programs are driving financial inclusion. Did you know that 60 million adults in the U.S. are unbanked or underbanked with no access to such products as a bank account or a payment card? According to a FDIC study in 2009, 66% of these households use alternative financial services such as check cashing or short term lending which are often expensive and unsafe.
MasterCard is committed to making mainstream financial services available to un/underbanked consumers. Our prepaid products are leading the way, providing access to funds in a safe, convenient and affordable manner. Through prepaid, we are focusing on three main initiatives:
1. Investing in infrastructure to enable financial inclusion
- Online bill pay – integrating online tools for prepaid cardholders to pay bills easily and safely
- Surcharge free ATMs – providing greater convenience and less expense for prepaid cardholders at over 32,000 ATMS in the US
- MasterCard rePower – established prepaid reloadable network across 50,000 merchant locations in the US
2. Building a road to the financial mainstream
- Alternative credit scoring – bridging the gap to accessing credit by using prepaid data to qualify thin/no file consumers for credit products
3. Educating and encouraging entrepreneurship
- Community Financial Outreach Program – our grass roots campaign building awareness, trust and financial literacy
- Priceless Pointers– our consumer website providing tools, resources, tips, and links to help consumers keep their financial life pointed in the right directions
- Are You Credit Wise? Program – our consumer education program that’s reached more than 500,000 students at nearly 80 colleges and universities
Prepaid accounts also solve cost considerations versus paper alternatives and that will be a major driver of further adoption. At MasterCard, establishing a positive benefit to society is at the heart of what we do. And through prepaid we are building roads and bridges to the financial services mainstream.