Washington, D.C. (PRWEB) July 17, 2014
Financial services and public policy experts today discussed the challenges underserved communities face without access to mainstream financial services and explored opportunities for increased financial inclusion during a briefing co-hosted by Master Your Card and the Center for Financial Services Innovation (CFSI).
The event, held at the National Press Club in Washington, D.C., focused on the conclusions from a new Massachusetts Institute of Technology (MIT) report released today at the briefing. The report, The Technology to Advance Equal Financial Opportunity: How Emerging Electronic Payment Technology Can Provide Financial Services To Underserved Communities, found that electronic payment technology, including payroll cards, mobile financial services and prepaid cards, are valuable tools that can provide the approximately 100 million underbanked or unbanked Americans with financial access.
J. Phillip Thompson, associate professor of urban studies and planning at MIT, and author of the new study; Jeanne Hogarth, vice president of policy at CFSI; Shawn Miles, senior vice president of global public policy at MasterCard; and Marla Bilonick, interim executive director at the Latino Economic Development Center participated in the briefing. Rep. Gregory Meeks (D-N.Y.) provided special introductory remarks.
“There is a high cost of living without access to high-quality financial services,” said Jeanne Hogarth. “Today’s panel discussion brought attention to the real need for products and services that meaningfully contribute to consumers’ financial health, and highlighted solutions through the smart use of electronic payment technology.”
The Federal Deposit Insurance Corporation estimates that approximately 30 percent of Americans and up to 50 percent of Latino and African American households rely on cash for many or most of their financial transactions. This lack of access to mainstream financial services forces these Americans to turn to high-cost pawnshops, payday lenders and check-cashing centers for everyday transactions like cashing a check or securing a line of credit.
During the briefing, participants emphasized the importance of providing the financially underserved with low-cost options for financial access and underscored the value of financial literacy programs to help low-income Americans use financial products to their benefit. Each of the panelists’ organizations participates actively in educational programs that aim to teach low-income and financially underserved Americans how to get the most out of their financial tools.
“Electronic payment technologies offer the flexibility and adaptability necessary to give the financially underserved more control and security over their money,” said Miles. “Master Your Card teaches consumers, small businesses, financially underserved communities, trade unions and even governments how to get more from their money by understanding and mastering the power of electronic payments.”
Underserved Americans often find that even opening a checking account can be a challenge. Common problems include insufficient funds to maintain the account, inability to access a bank location, poor or nonexistent credit history and high checking account fees. However, reliance on alternative financial institutions comes at a high cost – a family making only $20,000 a year may spend up to $1,200 annually on fees and surcharges, according to the Federal Reserve Bank of St. Louis. Prepaid and payroll cards come at a much lower cost, and offer low-income Americans important fraud protections and other safeguards that cash lacks – luxuries once exclusively available to those with banking relationships.
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About the Center for Financial Services Innovation
The Center for Financial Services Innovation (CFSI) is the nation’s authority on consumer financial health. CFSI leads a network of financial services innovators committed to building a more robust financial services marketplace with higher quality products and services. Through its Compass Principles and a lineup of proprietary research, insights and events, CFSI informs, advises, and connects members of its network to seed the innovation that will transform the financial services landscape. For more on CFSI, go to http://www.cfsinnovation.com and follow on Twitter at @CFSInnovation.
About Master Your Card
Master Your Card is a public education campaign by MasterCard® that helps consumers, small businesses and governments get more from their money by using prepaid, debit and credit cards to their advantage. For more on Master Your Card, go to http://www.masteryourcardusa.org and follow on Twitter at @MYC_USA.