Written by Technorati Tags: banking, debit cards, prepaid
The cost of maintaining bank accounts, compared to the cost of maintaining a prepaid balance, especially when the potentially reduced regulatory burden is taken into account, surely mitigates against trying to provide full service banking to some of the poorest people in the world. By contrast, using the mobile phone to provide enhanced payment services looks better and better. The possession of a mobile integrates people into the economy but without a payment service their participation is constrained. Put the two together and surely we get 90% of the way forward. Even in developed countries, there are a great many people who don’t need any kind of full-service banking or even a current account (eg, my son). But here’s what I don’t get: my son’s new current account provides a debit card, free ATM withdrawals and pays interest on the balance. And it’s free. By comparison, a basic pre-paid “debit” card has an initiation fee, monthly fees, load fees and ATM fees. Why? And why, when I looked into getting a basic pre-paid card, did it involve sending photocopies of passports and various other things I couldn’t be bothered with. (Rhetorical question: KYC and AML legislation).
These opinions are my own (I think) and presented solely in my capacity as an interested member of the general public [posted with ecto]
In looking at the linked DFID press release, I’m not sure I really understand the reasoning. What exactly is it that these billion people are supposed to gain from having opened a bank account?
Is there something I should have read to explain the evidently universal benefit of having a bank account over not having one?
That’s kind of my point. What most of these people need isn’t a bank account but a “payment account” which DFID has already succeeded in developing with Vodafone in Kenya. Hence the push ought to be in this direction, rather than bank accounts.
Got it, ok, at least I’m following that far. I don’t mean to be be a pest, but being very new to reading on this subject, could you suggest resources for better understanding the benefit of “payment accounts” as you put it? What about these payment services makes them strongly preferable?
Forget about the tribesmen… even in the US, there are millions of unbanked people. Even worse, there are millions of people who have tried the banking system but are now locked out (at least for 5-7 years) because they are on the Chexsystems bank list.