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BB&T to Broaden Client BaseFebruary 16, 2011 Finally, a bank that gets it: that the unbanked are not unbankable. BB&T, a large regional bank based out of Winston-Salem, NC, today announced a new low-cost transaction account "designed for individuals who don't qualify for a traditional checking account." Key to the new BB&T MoneyAccount is a prepaid Visa debit card that can be used to access cash at ATMs or as a credit/debit card at the point of sale. No checkwriting necessary; everything is electronic. These are some other key features:
BB&T execs said they were motivated in part to create the new MoneyAccount offering by recent news reports detailing how much it really costs consumers who do not have checking accounts. The BB&T MoneyAccount is a "cost effective alternative that can save [people] significant time and money," they said.
Lost Interchange RevenuesSome banking industry observers have suggested the BB&T prepaid card MoneyAccount is an attempt to capture revenues that it, like other credit card issuing banks, is apt to lose under pending regulations for debit card interchange. Interchange is the base price merchants pay for credit and debit card acceptance and processing; it gets paid to card issuers by the banks that process merchants card receipts. The Dodd-Frank Financial Reform Act, among other things, put the Federal Reserve in charge of regulating debit interchange. The move was in response to merchant complaints about the way interchange had been set and assessed historically. A first round of regulations, proposed by the Fed earlier this year, would dramatically slash debit card interchange, from an average 44-cents per transaction to 12-cents max. The American Bankers Association claims the move threatens to slash big bank profits by as much as 70%. (Small, community banks are generally exempt from interchange capping.) Prepaid debit cards are not subject to interchange provisions of the Dodd-Frank Act. Getting more Americans to bank should help BB&T weather the interchange storm. And it wouldn't be surprising to see other banks follow. After all, the unbanked/underbanked market is huge (at least 25 million American households) and non-bank providers of financial services (including Walmart) have already created pretty broad market receptivity for prepaid MasterCard and Visa debit cards. |
 More than 8,200 federally-insured financial institutions were collecting deposits and/or making loans to the U.S. "banking public" as of March 31, 2009. -FDIC |
"The BB&T MoneyAccount opens the door for many more consumers to enter the financial mainstream and enjoy the convenience and security of electronic payments," said Brian Triplett, chief of global prepaid products at Visa.