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Managing personal finances with expedited payments and prepaid debit cards
- Behshad Hastibakhsh
At the best of times, cash flow management is a major challenge for the estimated 25.6 percent of U.S. households that comprise the unbanked and underbanked segments of the population.
These demographic groups, who either do not have access to or do not qualify for traditional banking services, rely primarily on alternative financial services for cash-based bill payment, reloading of debit cards and other types of transactions.
In these difficult economic times, unbanked and underbanked consumers alike have discovered the benefits of convenient access to expedited payments and prepaid debit cards through self-serve kiosks as a means to effectively manage their personal finances.
Over the past decade, we have witnessed a drastic increase in the number of self-serve bill payment and financial services kiosks that are tailored to the needs of cash-preferred consumers.
Located in secure retail environments, self-serve kiosks provide the cash-preferred with a viable alternative to conduct financial transactions, and the opportunity to enjoy a more managed economic future. Some kiosk networks are household names because of the convenience factor to end-users.
Across the United States, the TIO brand, for example, is associated with secure access to self-serve financial services, including the reloading of NetSpend prepaid debit cards and Visa ReadyLink cards, as well as expedited bill payment services. With more than 1,200 convenience stores and retail locations, these self-serve kiosks also offer multifunctional financial services via an intuitive multilingual (English and Spanish) user interface to Hispanic consumers, who comprise a large segment of the cash-preferred demographic.
Convenience and cost of service are the two main factors that encourage millions of cash-preferred Americans to use prepaid debit cards as an alternative means to store funds, pay their bills and save money.
To manage personal finances, consumers use self-serve kiosks to reload their cards in real-time, avoid the costly overdraft fees and control their cash flow.
A recent report issued by Bretton Woods Inc., a consulting firm hired by the Network Branded Prepaid Card Association, "lauds prepaid cards as a money-management tool, as users can only spend what is loaded onto the card. Prepaid debit cards also offer an alternative for customers who do not use a traditional bank."
The report, titled "Analysis of Reloadable Prepaid Cards in an Environment of Rising Consumer Banking Fees," also finds that prepaid cards, especially in the wake of rising bank fees, can be less expensive for consumers. Therefore, underbanked consumers can save money by using reloadable prepaid cards versus bank accounts.
Finally, some prepaid card issuers, such as NetSpend and Mango Money, offer savings programs comparable to traditional bank accounts and enable consumers to build FICO credit histories and scores.
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