Reaching the Unbanked
Reaching the Unbanked
Many people are surprised to find out that they are not the norm in this country, when you explain to them that only half of the consumers in the U.S. have a credit card.
It is even a bigger shock to find out that 12% of the population does not have a Checking account, either.
Escalating fees and the closing of full service bank branches are locking some Americans out of basic financial services entirely. They are forced to use expensive check cashing services and bill-paying alternatives such as money orders. In Texas, for example, a low-income family may spend more than $200 a year in check cashing fees.
Ironically, banks reserve their harshest treatment ó and stiffest fees for those consumers who routinely transact the most business. They are using fees as a financial cudgel to encourage consumers to use fewer services.
Last April, for example, First Chicago Bank announced it would begin charging customers a $3 fee for certain transactions at teller windows. The bank's managers had calculated that it cost the institution an average of $250 a year to maintain each of its 650,000 personal checking accounts. When First Chicago took a hard look at the accounts, it focused on the costliest ones: Just 15% of the bank's customers a group known in the industry parlance as "transaction hogs" accounted for 60% of all transactions at teller windows. A bank spokesman says that the fee was intended to change those customers' behavior.
CheckRite Looking for ISOs
One of the nation's largest Check Verification and Recovery services is looking for ISOs.
CheckRite, who has traditionally handled all of its business through local offices and National Account Employees, is interested in having ISOs represent them throughout the United States.
For information contact Bo Barnes at 1-800-234-7800, ext. 5902
Poor people also need banks, but most cannot sustain the high minimum deposits required to avoid monthly charges and that's if they can still find a bank in their neighborhood. And many young people lack the kinds of identification, such as driver's licenses or employer picture IDs, that banks require to open an account.
Currently, no national law guarantees access to banking services for all. But a few states ó including IL, MA, NJ, NY and MN ó require banks operating within their borders to offer basic checking accounts with minimal fees for consumers making a limited number of transactions.
We think that New Jersey's "Consumer Checking Accounts Law" is particularly good, and could serve as a model for the rest of the U.S. It requires banks to offer checking accounts with an opening balance of $50 or less, and permits consumers to write at least eight free checks per month and to make an unlimited number of withdrawals at teller windows ó all for a fee of not more than $3 per month.
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