Did you know that it’s possible to pay living or business expenses without needing a checking or savings account? Prepaid cards for underbanked or unbanked individuals offer a smart, simple solution that just about anyone can use. If someone doesn’t have a bank account, or they live in an area without access to regular banking services, a prepaid card can help keep their finances in order.
With mobile financial technology taking over the industry around the globe, banking options are becoming more accessible. There’s a huge number of individuals living their day-to-day lives without relying on traditional methods, which can be a challenge for financial institutions. While many of these people are located in parts of the world where banking services are scarce, some of them also live in the U.S. Prepaid cards bring a world of new opportunities to those who lack bank accounts.
How Virtual Cards Serve the Unbanked
The 2017 Federal Deposit Insurance Corporation (FDIC) Survey estimated that over 30 million American households were either unbanked or underbanked. This is a massive number, and it’s an entire group of people you may have a hard time reaching with traditional financial services. Virtual cards for the unbanked offer the ideal solution, allowing those without bank accounts, or those who prefer alternative payment options, to manage their money with ease.
Prepaid cards are convenient and affordable, requiring no credit check, and presenting less financial risk than credit cards. The major benefits of prepaid cards for the unbanked include:
A Simpler Bank Account
Having a prepaid card is similar to having a bank account of your own. It allows you to make deposits, use ATMs, purchase items, and more. What separates a prepaid card from a normal checking account (which accumulates interest from the bank lending the money out) is that instead of placing money into an account, you can load money directly onto your card. All the cardholder does is load the amount of cash they want, and then they can use the card for just about any purchase or transaction!
One of the best parts about using a prepaid card is that it helps secure your identity and funds. Virtual cards aren’t linked to any specific checking account, so thieves and hackers are less likely to glean sensitive personal information from them. If someone already has a bank account, using a reloadable card for purchases can help protect their savings if a thief steals their card information. Employers can also secure payments by sending them directly to the card.
Ease of Use
When you provide customers with prepaid card options, you’re giving them an easy way to store and manage money. Users can make transactions and add more money at any time. Options include reloading at ATMs, reloading at financial institutions, and even adding funds via cash at certain stores. It’s so simple that just about anyone can sign up for a prepaid card, regardless of financial or credit history.
Virtual cards are excellent for unbanked and underbanked individuals who want to improve their budgeting strategies. These cards allow people to add as much money as they want to spend. They help prevent users from falling into the credit card trap or spending too much during the month. This makes using a prepaid card a smart way to save money and make sure the bills get paid.
Managing finances has become more convenient than ever thanks to the integration of mobile technology with banking. If a cardholder has a mobile phone, there are endless possibilities for paying, reloading, and managing cards. Many programs now allow users to add money to their cards directly from their mobile phones. Wallet apps are also available to help cardholders easily access multiple cards from one resource.
A Long-Term Financial Solution for the Unbanked
Financial institutions are constantly developing and refining their use of financial technology or “fintech” to reach a wider market and create a more user-friendly experience. Today’s cardholders and account holders are accustomed to instant information access and fast-paced mobile phone apps, so it’s up to you as the bank or card provider to develop a solution that meets these needs.
Prepaid cards for the unbanked already serve as a popular form of fintech for companies around the world. For example, companies like Axiom Prepaid Holdings are currently offering physical prepaid cards and mobile solutions to individuals and businesses in Africa.
These prepaid cards are ideal for people in Africa who are unbanked or underbanked, as well as business leaders who want to provide virtual cards to their employees. In addition, they’re helpful for low-income or financially illiterate families who are looking for an easier way to manage money.
Virtual cards are picking up traction for the unbanked in countries all over the world. Some of the most well-known providers in the U.S., such as Wells Fargo, American Express, and Fifth Third Bank, offer high-quality prepaid cards with minimal fees. Other fintech companies like PayPal also give people access to virtual debit cards, mobile deposits, and additional tech-based solutions.
If you’re looking to help customers who may be in challenging financial situations, having a prepaid card program could be the key to reaching more people. With more and more financial institutions taking this route, virtual cards could become a mainstream solution for unbanked individuals and entrepreneurs alike.
Reach the Unbanked by Offering Prepaid Cards With Hydrogen
Expand your financial institution’s services today by providing prepaid cards for the underbanked and unbanked populations. At Hydrogen, we work to innovate and integrate fintech solutions so your processes can become faster, smarter, and more secure. Our no-code prepaid card platform and sophisticated underlying APIs help you deliver the seamless experience that your unbanked customers deserve.
Hydrogen gives you the tools and resources to reach the unbanked by offering the latest technology options. To jumpstart your prepaid card program with us, start building on our platform today.