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Table of Contents

Lead Story

According to the street


Industry Update

February brings new payment schemes

Durbin delaying EMV road map

Checkout surcharging facts debated


How effectively are banks reaching financially underserved?

Research Rundown

Selling Prepaid

Prepaid in brief

Prepaid leading 'a la carte' revolution

Praise, criticism for UC card programs


Are your merchants surcharging card customers?

Patti Murphy
ProScribes Inc.


Street SmartsSM:
Heed merchants' red flags to strengthen your business

Jeff Fortney
Clearent LLC

Can bitcoins become a full-fledged payment system?

Nicholas Cucci
Network Merchants Inc.

How ISOs can work more effectively with MLSs

Christopher Briller and Sean O'Neil
MerchantPro Express LLC

Is relationship selling on the rocks?

Dale S. Laszig
Castles Technology Co. Ltd.

Use the right words to create new revenue via ACH

Sandy Jensen
Empire Bank

Company Profile

Charge Card Systems Inc.

Layered Technologies Inc.

New Products

A portal for ISO apps

P2 App Portal
POS Portal Inc.

ATM without the card

Cardless ATM
Diebold Inc.


Make the most of work


Readers Speak

2013 events calendar

Resource Guide


A Bigger Thing

The Green Sheet Online Edition

February 25, 2013  •  Issue 13:02:02

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GS reprint
How effectively are banks reaching financially underserved?

Editor's Note: This article was first published by Inside Microfinance on Jan. 11, 2013. Reprinted with permission; all rights reserved. Copyright Patti Murphy.

Why are so many people in America unbanked or underbanked? Here's the No. 1 reason: only four in 10 U.S. banks design products that address the basic financial needs of low-income consumers. The data is contained in a report released recently by the Federal Deposit Insurance Corp.

FDIC Chair Martin J. Gruenberg said banks have made real advances in serving the needs of this segment of consumers. For example, in 2009 the FDIC reported that only 25 percent of banks targeted marketing to reach the unbanked and underbanked. However, the country's unbanked population grew during those same two years - by almost 1 million. The 2011 FDIC Report of Banks' Efforts to Serve the Unbanked and Underbanked, which is available for download at, draws from results of a voluntary online questionnaire completed by over 500 U.S. banks representing various asset sizes. It addresses marketing and retail strategies, basic account features, auxiliary products (think money orders, check cashing and prepaid debit cards) and financial education and outreach.

Among the findings reported:

In addition, 80 percent of surveyed banks offer small-dollar unsecured personal loans; the minimum loan amount at 53 percent of respondents is between $1,000 and $2,500. There are no minimums on small-dollar loans at 43 percent of banks. Generally, these loans offer repayment terms of 90 days or more and annualized interest rates under 36 percent. Typically, the banks offering small-dollar loans approve them in less than 24 hours.

How can banks reach the underserved?

The FDIC report also highlights opportunities to increase access to basic financial services. These are basic suggestions, such as, "Expand offerings of basic, low-cost checking and savings deposit accounts." Banks can do this by offering low-cost card-based checking accounts, the report noted. The report also suggests banks broaden offerings to underserved households to include, for example, check cashing, money orders and remittances.

It also recommends that banks enhance marketing of small-dollar loan products, noting that at least one-third of consumers who borrow from payday lenders and pawn shops complain that banks don't offer small-dollar loan products. Perhaps most importantly the report urges banks to partner with community organizations to promote bank account ownership.

Notice to readers: These are archived articles. Contact names or information may be out of date. We regret any inconvenience.

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