It seems impossible for someone in the modern age to not have access to any banking services they need. It sounds like a throwback to the eighteenth century. For people that work every day to distribute funds to the public, though, it’s a difficult modern truth. Around one in five Americans were “unbanked” or “underbanked” in 2021, according to a survey conducted by the FDIC.
How prevalent is this problem? About 4.5% of U.S. households were unbanked in 2021, meaning that no one in those households had a checking or savings account active. It’s a small percentage, but it adds up to 5.9 million households. Another 14.1%, or 18.7 million households, are underbanked. That is many millions of people who are missing some or all of the banking services many of us rely on every day.
It's especially important to find a good solution for sending funds to underbanked or unbanked populations for one main reason: these folks are likely to really rely on that money you’re distributing. When the FDIC examined the reasons for being unbanked, it showed that economically vulnerable people with low incomes were disproportionately likely to be unbanked or underbanked.
The most common reason for not having full banking services was being “unable to meet minimum balance requirements.” The next most common reason reported was that they “don’t trust banks.” When we’re talking about a population that is very likely to earn less than $15,000 per year as a household, this FDIC survey paints a picture of economically disadvantaged people who have had bad experiences with the banking industry.
How can we approach a population like this with money-either money owed to them, or funds aimed at helping them? One of the biggest hurdles to distributing aid to people who need it is when we try to operate through traditional, written paper checks. Cashing or depositing a check, naturally, requires an active bank account! When the people surveyed by the FDIC do receive a check, they can end up patronizing check cashing stores or pawn shops and being victim of fees and predatory lending practices.
One alternative for distributing funds is using prepaid cards or virtual prepaid accounts. There’s no need for a bank account with a prepaid card-just activate and spend. Distributing funds with prepaid cards also eliminates the fees paid to check cashing services. The virtual prepaid method for distribution relief has another big advantage: flexibility. The only requirement is an email address, which makes it much easier for people who are transitory and have no permanent mailing address to receive funds. Plus, email arrives much faster than physical mail, so help can get delivered quickly.
And finally, digital or physical prepaid funds make it easy to participate in the online economy after activation. The world has gotten much more digital in recent years—accelerated by the COVID-19 pandemic and social distancing-putting more and more parts of daily life online and out of reach for cash-using customers with no alternative.
Blackhawk Network (BHN) has a long history of getting funds where they need to go, no matter what the circumstance is. Whether you’re trying to distribute funds as part of a corporation, a government program, or trying to help employees struggling with inflation and gas prices, a prepaid card or virtual prepaid account can help. BHN could be provide you with the fast, convenient solution you’ve been looking for.
Ready to change how you distribute funds to everyone who needs them? Talk to a BHN expert at 866.219.7533 or Click here to start a conversation.