New research shows nearly two-thirds of Americans are now smartphone owner and 57% have used their phone to do online banking. However, nearly half of smartphone-dependent Americans have had to cancel or shut off their cell phone service for a period of time because the cost of maintaining that service was a financial hardship.
A first-of-its-kind study on Western Union sheds new light on the positive impact of cross-border money transfer broadly and of its services in particular. For example, each Western Union Agent location in the Philippines handles transactions that infuse enough funds into the local economy to create 85 non-Western Union jobs.
RushCard announced its “RushGoals” tool and a cashback reward that helps members who want to budget and save. The “RushGoals” feature is designed to help underserved customers achieve their financial goals. It ultimately lets cardholders create personal financial goals, put money aside in a separate sub-account, and track their progress. Each month in which a Cardholder maintains an average daily balance of $500 or more across their Goals sub- accounts, the Cardholder will be rewarded with $2 that will be applied toward their RushCard fees. Cardholders can set up short-term or long-term Goals, and put money toward them by transferring money from their card manually or on a recurring schedule.
Some banks are beginning to test alternative financial services (AFS) products and reevaluate their product offerings in order to reach the population of underbanked and unbanked Americans, according to Underbanked and Unbanked Consumers in the U.S.: Successfully Targeting Consumers of Alternative Financial Services by market research publisher Packaged Facts. P One product that is attractive to unbanked consumers and that financial institutions can leverage is the general purpose reload (GPR) prepaid card, for consumers willing to direct deposit their paychecks to a card account. BB&T became the first large U.S. bank to offer a prepaid debit card linked to a full bank branch and ATM network. The Federal Deposit Insurance Corporation (FDIC) has found that nine million households are unbanked (8% of all U.S. households) and have no checking or savings account with a financial institution.
Regulations that would reduce swipe fees by about 70% are scheduled to take effect July 21, but the banking industry is pushing for a bill to delay reform by two years and further study. To this, Bernanke has responded against calls for delay, indicating the Fed would not have final regulations in place anyway due…
“In response to a direct question from Senator Tester today, Fed Chairman Ben Bernanke reiterated before the Senate Banking Committee his concerns about the effectiveness of the small bank exemption embodied in the debit interchange rule. Bernanke said that he ‘can’t say with certainty’ that the exemption will work, that there ‘are market forces that…
Lower-income consumers frequently shop but generally spend less per trip than average, often shopping with only a paycheck or pocket cash. African American lower-income consumers make the most retail shopping trips per year with 177 trips, seniors make 169, and Hispanics make 168. Lower-income households with children spend the most at $39.65 per trip, followed by younger households at $37.58.Lower-income shoppers will generate $115 billion in incremental spending during the next decade, according to SymphonyIRI Group and its fourth annual “The Lower-Income Shopper Report: Serving Lower-Income/Multicultural Shopper Micro-Segments” research report. At the same time, 49 percent of lower-income shoppers are much more likely to track their spending during the trip and make budget driven decisions on the fly versus 38 percent of higher-income shoppers. During the past two years, half of lower-income shoppers report that they have decreased spending in discretionary areas, including home furnishings and furniture, in order to better afford essentials, such as food and healthcare.
The U.S. Treasury Departmentâs announcement of a 2011 pilot program to test the delivery of tax refunds via debit card accounts represents a critical milestone by the Obama Administration to ensure millions of underbanked consumers have access to well-designed transaction products. The pilot program, which was deeply informed by the Center for Financial Services Innovationâs SAFE-T Accounts proposal. The CFSI disclosed the Federal government could potentially save tens of millions of dollars a year through issuing refunds electronically in lieu of much more costly paper checks. The tax time accounts will also introduce more underbanked consumers to the potential and utility of such financial products and broaden the overall market for these and a variety of other financial services and products.
The National Retail Federation is advocating the need for further federal action to control card swipe fees. Pointing to a new Federal Reserve study showing that swipe fees result in a âtransfer of incomeâ from low-income individuals to wealthy individuals and driving up prices for all consumers, with an estimated $151 of the extra amount paid by the average cash-using household goes to subsidize card-using households. The NRF is also pushing to allow merchants to charge different prices for cash and credit, disclosure of âfull informationâ about fees, redistribution of fees to low-income individuals through tax policy, increased competition from alternative payment systems if it cannot be attained within the credit card market, and government regulation of both credit card fees and rewards.
A monthly tracking poll reveals consumers showed little
improvement in economic confidence in December and they grew slightly
more pessimistic about their finances. Despite concern over the economy
and their finances, consumers did not cut back on holiday spending as
much as they anticipated, a welcome sign for retailers. The Discover
“U.S. Spending Monitor” dropped 3.3 points in December to 83.0,
primarily driven by a big decrease in post- holiday spending intentions
from consumers. The Monitorâs findings were reflected in the National
Retail Federationâs report showing an increase in holiday sales from
last year. A majority of consumers also plan to cut discretionary
spending in all categories surveyed by the “Monitor,” a trend that
hasnât changed since September. There was a 2-point increase to 10% in
the number of consumers planning to save and invest more. A big driver
in the increase in holiday sales may have come from middle-income
consumers ($40k-$75k). Heading into Christmas, only 6% of middle-income
consumers planned on spending more on holiday gifts. But after
Christmas, 18% said they actually spent more, a 12-point increase.
Currently 25.6% of all U.S. households are unbanked or underbanked with disproportionately low-income. With nine million households unbanked-17 million adults-and 21 million households underbanked-43 million adults,- 21.7% of black households are unbanked; as are 19.3% of Hispanics and 15.6% of American Indian/Alaskans. Only 3.5% Asians and 3.3% of whites were unbanked. These findings, according to the FDIC “National Survey of Unbanked and Underbanked Households,” also show among the underbanked- those who rely on alternative financial services such as non-bank money orders and the like- 31.6% of black households partook, as did 28.9% American Indian/Alaskans, 24% of Hispanics 7.2% of Asian households and 14.9% of white households. Additional findings show households with income under $30,000 account for at least 71% of unbanked households; nearly 20% of lower-income U.S. households do not have a bank account; and 4.2% of households with annual income between $30,000 and $50,000 are unbanked.
HOUSEHOLDS & UNBANKED (%)
Black: 21.7
Hispanic: 19.3
Native American: 15.6
Asian: 3.5
White: 3.3
Source: FDIC
A monthly tracking poll reveals that upper-income consumers are now showing the biggest decline in economic confidence. Overall, 59% of consumers rated the economy as poor, a 3-point increase from October.
The Discover “U.S. Spending Monitor” was flat in November, rising only a half point to 86.3 as a majority of consumers continued to be pessimistic about the economy and their personal finances. The number of consumers who rate their finances as fair or poor was unchanged from October at 66%. Forty-nine percent of consumers felt their finances were getting worse, also unchanged from October. For the first time since July, a majority of upper-income consumers currently rate the economy as poor, 55%. This was an 8-point jump from October and the biggest increase from this income group the Monitor has reported since September 2008. There was also a 5-point increase to 42% in the number of upper-income consumers who felt the economy was getting worse, the highest number reported since June. Discover noted that November marked the first time in 26 years the unemployment rate reached double digits and while some economic reports have stated the economy is getting better, a majority of upper-income consumers tend to disagree.