After the Wall Street Journal’s report last week about the elimination of free checking accounts from 41% of America’s financial institutions, consumers should be worried.
As a record high amount of cash is being stashed in checking accounts – $1.4 trillion as of the third quarter of 2013, up from nearly $1.3 trillion in 2012 – consumers and businesses are relying now more than ever on the easy accessibility to cash on hand.
Now, with the loss of free checking accounts, along with the bombardment of hidden fees associated with having a traditional bank account, there is an overwhelming need for a new banking model.
Fortunately for the consumer, there is an up-and-coming marketplace that eliminates the need for checking accounts – prepaid. The prepaid model is an evolutionary move away from the antiquated banking model that allows for a transparency not offered today. Prepaid has become the new generation of finance for the consumer.
Not only does the prepaid industry allow for a better sense of control, the model calls for up-front fee costs, creating a more transparent relationship with the consumer. After what the bank has done to consumers in terms of hidden fees, this is exactly the type of relationship they are looking for. This is simply more welcoming than the “hidden fee” model. In turn, it is redefining how consumers and banks interact with one another, and, more drastically, how consumers interact with their money.
Prepaid also caters to the underbanked and the unbanked, which makes up 20% of the American population. The FDIC reported in June 2013 that 65% of unbanked households used alternative financial services. This means that the unbanked and underbanked need to do their banking somehow, and one in every ten households is turning to prepaid.
After the banking crisis of 2008, business owners started relying more on cash-on-hand rather than credit, just like individual consumers. Now, with the news of discontinued free checking accounts, this leaves 7.2 million small businesses pining for a new way of conducting their business banking. The answer for them is also prepaid.
While there are options available for retail prepaid cards, small businesses, who make up a large portion of the typical banking clientele, are clamoring for a prepaid outlet as well. Mercury Service Group & VISA’s CONEXT™ prepaid card is the perfect candidate to fill that void. It can give small business owners the leverage they need to take control over their finances, and better support the way they run their business.