I recently travelled to Rome to give a keynote about financial inclusion. This amazing city has such a rich trading history, yet today 15 million people don’t have a bank account in Italy. Statistics like this apply to every country in Europe because there are still so many marginalized by lack of access to technology and financial services.
Western Europe alone has an unbanked and underbanked population of 93 million.
The financially excluded and underserved are often portrayed as homeless, impoverished, illegal immigrants, or poorly educated. But the stereotypes are not accurate. Many of them are in work and receive wages. According to our research, most of them are long-term residents of their country.
1 in 4 in this group believes that they do not have enough money for a bank account. Others “don’t want or need” an account or just don’t trust banks.
Because of their lack of access to financial services, they can’t pay bills through direct debit, make transfers or use ATMs. They don’t get the discounts we enjoy when shopping online, make mobile payments or use contactless. Instead they pay rent in cash, store money in pots and envelopes, and spend hours queuing to pay bills.
So what can we do? Prepaid cards offer a logical solution, as many prepaid accounts in Europe actually function as a basic payment account. Owning a prepaid card gives excluded consumers the ability to participate fully in our society. Prepaid cards are safer than carrying cash around and allow consumers to control their spending. They can be used to make online purchases, receive wages, pay bills and transfer funds, without having a bank account.
The challenge is that almost half of Europe’s financially excluded haven’t heard of prepaid. This is where education campaigns can help to raise awareness of prepaid and its benefits.
It is also vital that the regulatory environment be supportive of financial inclusion efforts. Anti-money laundering, banking, and payments regulations need to be carefully assessed for the potential impact to the unbanked, and MasterCard is actively engaged in these debates at both the Europe and domestic level. Prepaid cards offer a safe, convenient, and affordable road to financial inclusion, and this road needs to be kept clear.