While not everyone loves the bank, most Americans still keep an account handy to cover emergencies and pay bills.
But it’s a different story in other parts of the world, as Money 20/20 attendees have been talking about. In fact, a staggering 2 billion people – around one-third of the world’s entire population — belong in the category of “unbanked” according to The World Bank. And surprisingly in the US, the FDIC finds around 8% (or 25 million people) still do not use a bank account.
The reasons may vary from institutional distrust to simply a lack of convenient access, especially in less-developed countries. But that doesn’t stop innovative financial payment providers and Fintech companies from figuring out ways to serve this vastly untapped market.
Here are a few ways the companies attending Money 20/20 are reaching the global unbanked market:
1. Prepaid cards
While reloadable prepaid cards (not gift cards) aren’t new, their popularity continues to accelerate in developing countries and as consumers look for secure ways to pay online. A 2014 Pew survey also found that most prepaid card users in the US have had checking accounts or credit cards before, and said they like using the pre-loaded, fixed amount cards to avoid excess spending, overdraft fees, and credit card debt.
2. Mobile wallet
Not long after Google Wallet and Apple Pay made smartphone payments mainstream, many of the major banks, PayPal, Starbucks, and even Walmart joined the fray with their own “mobile wallet” apps. But the rush to mobile payment apps may not come as a surprise when you consider one billion unbanked people have access to a mobile phone and that a 2015 Zion Research report forecasts the mobile wallet market will balloon to $2.5 trillion by 2020 from $500 billion in 2014.
3. Peer-to-Peer (P2P) payments
While mobile wallet apps let you use your phone to pay at the register, P2P payments make sending money as easy as sending a text message. And because P2P technology can be used even in countries that lack financial infrastructure, its growth potential is enormous. In terms of serving the unbanked population in less-developed countries, one of the most successful P2P payment systems to date is M-Pesa, which has reportedly been used by more than 70% of Kenyans that live on less than $1.25 a day.
This year’s Money 20/20 attendees are proving that technology is paving the way for more people to transfer money and pay for goods and services.
World First USA, Inc. — who’s at this year’s Money 20/20 too — is also using technology to make international money transfers more accessible than ever before. While we don’t serve the underbanked population directly, our international payments technology is helping small entrepreneurs and online sellers expand into foreign markets that would have been difficult to access in the past.
Are you a Money 20/20 attendee this year? We are too! Come talk to us at our charging station near the entrance of the exhibition hall to learn how we can add an international payments capability to your service offerings. Simply put, partnering with us could be a great way for you to add another revenue stream to your business while enriching your customer relationships at the same time.