Search Results
Journal Article
Digital Currency, Digital Payments, and the 'Last Mile' to the Unbanked
Digital forms of payment are either not accessible or highly costly for unbanked consumers. This is because these forms of payment must be "funded" by some source of money, such as cash or a bank account. That creates the "last-mile" problem for the unbanked. This article examines various solutions for the funding problem that have been proposed in the literature, by regulators, and in bills submitted to Congress.
Working Paper
Defining Households That Are Underserved in Digital Payment Services
US households that lack digital means of making and receiving payments cannot participate fully in an increasingly digitized economy. Assessing the scope of this problem and addressing it requires a definition of households that are underserved in digital payments. Traditional definitions of households underserved in the banking system—those that are unbanked and those that are underbanked—do not account for the ownership of nonbank transaction accounts that can be used to make and receive digital payments. In this paper, we define households underserved in digital payments by considering ...
Working Paper
Low-Income Consumers and Payment Choice
Low-income consumers are not only constrained with spending, but also with the type and variety of payment methods available to them. Using a representative sample of the U.S. adult population, this paper analyzes the low possession (adoption) of credit and debit cards among low-income consumers who are also unbanked. Using a random utility model, I estimate the potential welfare gains associated with policy options suggested in the literature to provide subsidized and unsubsidized debit cards to this consumer population.
Briefing
Could Municipal IDs Facilitate Access to Financial Services?
Of the approximately 5.6 million U.S. households that did not have a bank or credit union account in 2023, about 13 percent cited not having the identification (ID) required to open an account as a reason for being unbanked. Municipal ID programs provide a form of local identification and can be designed to facilitate access to banking and financial services, though challenges to achieving this potential remain.
Discussion Paper
How and Why Do Consumers Use “Buy Now, Pay Later”?
In a previous post, we highlighted that financially fragile households are disproportionately likely to use “buy now, pay later” (BNPL) payment plans. In this post, we shed further light on BNPL’s place in its users’ household finances, with a particular focus on how use varies by a household’s level of financial fragility. Our results reveal substantially different use patterns, as more-fragile households tend to use the service to make frequent, relatively small, purchases that they might have trouble affording otherwise. In contrast, financially stable households tend to not use ...
Report
Financial Inclusion and Consumer Payment Choice
This report examines similarities and differences among three groups of consumers: those without a checking or savings account (unbanked), bank account adopters who have used alternative financial services (AFS) in the past 12 months (underbanked), and bank account adopters who did not use AFS in the past 12 months (fully banked). Consumers in the three groups have different demographic characteristics, income, and payment behaviors: • The payment behavior of the underbanked is similar to that of the fully banked.• Unbanked consumers make fewer payments per month than the fully banked and ...
Report
Financial inclusion and consumer payment choice
This report examines similarities and differences among three groups of consumers: those without a checking or savings account (unbanked), bank account adopters who have used alternative financial services (AFS) in the past 12 months (underbanked), and bank account adopters who did not use AFS in the past 12 months (fully banked). Consumers in the three groups have different demographic characteristics, income, and payment behaviors: ?The payment behavior of the underbanked is similar to that of the fully banked. ?Unbanked consumers make fewer payments per month than the fully banked and the ...
Discussion Paper
Meet People Where They Are: Building Formal Credit Using Informal Financial Traditions
The Consumer Finance Institute hosted a workshop in February 2019 featuring José Quiñonez, chief executive officer, and Elena Fairley, programs director, of Mission Asset Fund (MAF) to discuss MAF’s approach to helping its clients improve access to mainstream financial markets. MAF’s signature program, Lending Circles, adapts a traditional community-based financial tool known as a rotating savings and credit association (ROSCA) to help establish or expand credit reports for participants who may not be able to do so through traditional means. Lending Circles have served more than 10,000 ...