Banking the Underbanked with Prepaid

March 7, 2011

Research and Markets, the international market research firm, has for sale a new report - Analysis of Underbanked Populations in the U.S.: Banking the Underbanked with Prepaid Cards. The new tome is chock full of marketing information about the underbanked and strategies for making banks relevant for these folks.

The unbanked and underbanked spend $10.4 billion a year on more than 324 alternative financial services products, according to Research and Markets. Although these individuals tend to be educated and employed, they typically don't trust/like banks. Instead, they use check cashing services, payday lenders, rent-to-own and similar non-bank providers of financial services.

"The objective of the report is to provide vital marketing information about the underbanked," the company explained in a statement. And to offer insights and recommendations for financial institutions that want to pursue this untapped market.

FDIC data suggests there were 21 million underbanked households in America in 2009. And prepaid cards are being used by increasing numbers of these and other Americans.

Data compiled by the Federal Reserve shows that payments with MasterCard- and Visa-branded prepaid cards grew 21.5% on an annualized basis between 2006 and 2009. In 2009, there were as many prepaid debit card transactions as there were ATM cash withdrawals in the U.S.: 6.0 billion, according to the Fed's most recent report on retail payments.

More than 800 million adults with bank accounts live on less than $5 a day

_{-Financial Access Initiative}