NextBillion - An Initiative of the William Davidson Institute at the University of Michigan

Friday, March 14, 2014

For people with bank accounts and credit cards, the proliferation of check cashing stores must seem a bit of an oddity. The high-fee services prompt questions like who actually uses them and why don’t they just go to a bank? But behind those ubiquitous shops lays a stark reality: one third of Americans live on the margins of our financial system. They are the underbanked or unbanked, and without banking services at their disposal, they pay dearly to access simple financial transactions like cashing checks or paying bills.

“There’s a saying that it’s expensive to be poor. And it’s sort of ironic that the less money you have the more it costs you to manage and move it,” says Dan Schulman, group president, Enterprise Growth, American Express, explaining that banking fees, minimum balance requirements, and inaccessible banking infrastructure has forced many Americans into the hands of fringe financial institutions. “It shouldn’t have to be that way. Technology can provide tools and services that fundamentally recreate what was traditional banking.”