The Pew Charitable Trusts have announced a new project aimed at 'helping America's workers underserved by mainstream financial institutions secure access to safe, affordable, fair, and empowering bank accounts. The Pew Safe Banking Opportunities Project, a two-year $2.1 million initiative, will develop and promote standards for bank accounts so that moderate- and low-income households that are new to or have been left out of the mainstream banking system are less likely to have to rely on overly expensive, income-stripping financial products.'   » Continue Reading

Marianne Crowe, Vice President, Emerging Payments Research Group, at the Federal Reserve Bank of Boston, gave a presentation last week titled "Emerging Payments - The Changing Landscape" to the Maine Association of Community Banks and to the New Hampshire Community Bankers Association. Crowe's presentation discusses the growth in debit card payments, the emergence (and potential threats to banks) of decoupled debit cards, prepaid cards for the unbanked, and the use of the Internet for bill payment, ecommerce purchases, and person-to-person or account-to-account money transfers. She also discusses contactless payments and mobile banking.

AccountNow has announced several new services: the addition of the iAdvance Line of Credit from MetaBank, the elimination of upfront fees for new accounts with direct deposit, and the debut of Money 411, an online financial resource center.   » Continue Reading

Experian has announced the launch of Emerging Credit Score, a new credit scoring tool developed with eBureau designed to assist lenders in evaluating the creditworthiness of unbanked and underbanked consumers.   » Continue Reading

The Center for Financial Services Innovation has published a new report titled "Innovation Trends in Financial Services to the Underbanked" . "The market opportunity represented by underbanked consumers is being met by a number of startup companies with innovative consumer products, marketing methods and distribution channels, and/or risk management tools. CFSI's evaluation of several of these companies based on customer impact, financial return, and innovation reflects important trends in the underbanked market. Through alternative data, prepaid cards, and marketing and distribution models, these companies provide underbanked consumers with the services needed to access the path to financial prosperity."

Meta Payments Systems has announced "the iAdvance Line of Credit for the millions of Americans who are unable to access affordable, small dollar credit."   » Continue Reading

Romina Abal of Edgar, Dunn & Company has published a new article titled "Rich Opportunity in the Unbanked Segment" . "New and unique data from the PaymentDynamicsSM 2007 Preferred Payments Study shows that the conven- tional wisdom regarding the unbanked is overly simplistic at best, and in many ways, simply inaccurate. For instance, many financial institutions may be sur- prised to learn that more than half of the unbanked have attended college, or that only a third of them are rated as having sub-prime credit scores."

The Center for Financial Services Innovation has announced "the initiation of the first comprehensive, authoritative national segmentation study of the underbanked market. Citi, eFunds (now part of Fidelity National Information Services), H&R Block and MasterCard are together sponsoring the research. All are members of CFSI’s Innovators Roundtable, which brings together groundbreaking, nationally significant financial services companies to collaborate toward accelerating underbanked practice across the industry."   » Continue Reading

BanX has announced plans to increase nationwide efforts of the Company's BanXcard Maestro Card - say it is "a safe substitute for traditional checking accounts that allow users to load cash on BanXcards at thousands of card-loading retailers including convenience, grocery and department stores and gas-stations." BanX claims its fee structure is simpler and less expensive when compared to Wal-Mart's MoneyCard. BanX's card is issued by BankFirst.   » Continue Reading

The Center for Financial Services Innovation announced has announced the "CFSI Catalyst Fund, L.P., a private equity limited partnership created to cultivate new financial services companies and solutions focused on the underbanked."   » Continue Reading

A paper titled “The Power of Experience in Understanding the Underbanked Market” (PDF) issued today by The Center for Financial Services Innovation (CFSI) and sponsored by Key Bank concludes that "underbanked consumers want traditional financial services relationships."   » Continue Reading

Green Dot Corporation has announced an agreement with CardinalCommerce to "enable eCommerce merchants for the first time to receive online payments from a largely untapped consumer segment: the financially underserved community of more than 80 million "cash consumers" nationwide who do not have access to traditional bank accounts, credit cards or other financial tools."   » Continue Reading

CFSI has announced the publication of a new paper titled "Mobile Financial Services and the Underbanked: Opportunities and Challenges for Mbanking and Mpayments" (PDF) by Katy Jacob and Caroline Boyd.   » Continue Reading

Jeffrey Gangemi writes for Business Week about Microfinance International - MFIC - a "microfinance and remittance processing upstart" that provides "a remittance delivery platform that can be licensed to banks, new loan products for migrant workers in the U.S., larger loans to provide more lending capital to microfinance institutions in developing countries, and a burgeoning network of retail banking outlets in the U.S. geared toward serving the needs of low-income people."

In an article titled 'Payroll cards offer convenience at lower cost", James A. Ambrosio writes for Bankrate.com about the advantages of payroll cards - particularly for the unbanked.

Javelin Strategy & Research has published a new report, Reaching Underbanked Latinos, concluding that unbanked and underbanked Latino consumers in the United States have completely different financial services needs and expectations than other ethnic populations.   » Continue Reading

Visa USA has announced an agreement with Blackhawk Network to introduce Visa ReadyLink, Visa’s Prepaid Load Network, to Blackhawk Network’s alliance partner stores. Safeway will be the first in Blackhawk Network’s alliance of 60,000 stores in North America to implement Visa ReadyLink. Fifth Third Bank will serve as the acquiring financial institution.   » Continue Reading

The Consultative Group to Assist the Poor (CGAP), United Nations Foundation (UN Foundation), and The Vodafone Group Foundation (VGF) have released the first public findings of a study titled "Mobile Phone Banking and Low Income Customers: Evidence from South Africa" (PDF) that studied on how low-income individuals in South Africa use mobile phone banking ("m-banking"). The findings show that m-banking can be up to a third cheaper for customers than the current banking alternatives, and users value the service for its security and easy use. However, this study shows more needs to be done to address negative perceptions about the cost and effectiveness of mobile phones and m-banking. The study concludes "with millions of mobile phones already in poor people’s hands, CGAP, UNF, and VGF see tremendous potential in the power of network operators, banks, and new entrants to deliver financial services through this channel.   » Continue Reading

The Center for Financial Services Innovation has posted a new paper titled "Distributing Prepaid Cards Through Worker Centers: A Gateway to Asset Building for Low-Income Households" (PDF) by Katy Jacob, Janice Fine and Lauren Leimbach.   » Continue Reading

The Center for Financial Services Innovation (CFSI) has announced the inaugural members of its Innovators Roundtable: Citigroup, eFunds, Experian, H&R Block and Wells Fargo. According to the Center's Director, Jennifer Teacher, these companies were selected for their pioneering work in the underbanked market space, their national prominence, and the range of approaches and industry areas they represent.   » Continue Reading

Constantine von Hoffman writes for BrandWeek how some marketers are discovering the "underbanked" - pointing out that the "fastest growing product in the financial services sector is prepaid debit cards, most of which are being bought and used by people who don't have a bank account. Similarly, prepaid is currently the hottest segment of the wireless category."

The Center for Financial Services Innovation has released "Highlights From The Inaugural Underbanked Financial Services Forum" (PDF) written by CFSI's Research Director, Katy Jacob.   » Continue Reading

Carolyn Said of the San Francisco Chronicle writes about the cost of sending remittances to Latin America.

For years, wire transfers through market leader Western Union and its competitor MoneyGram were the main game in town for people in the United States sending remittances back home, other than informal channels such as asking a friend to carry money home. But in the past few years, increased competition from banks, credit unions and all kinds of new businesses has begun to chip away at the wire-transfer services' grip on the market -- and their prices.

Margarita Bauza of the Detroit Free Press writes about the use of payroll cards. "Payroll bank cards, popular with people who do not qualify for bank accounts or those who are more likely to use expensive check-cashing services, account for 21% of all consumer transactions. That translates to a $2.7-billion business in the United States alone. Boston-based consultant Aite Group says payroll card use is expected to grow to $27.1 billion in spending by 2009."

Kathryn Kranhold and Robin Sidel report for the Wall St. Journal on GE's expansion of its "road to credit" program that provides private label cards with low credit lines to consumers who otherwise might not qualify for traditional credit cards.

Oscar Kimanuka reports from Nairobi for AllAfrica.com on the growth in mobile phone usage in Africa, enabling new businesses as well as mobile banking services. Kimanuka reports that, according to Dr Mohammed Yunus, founder of the Grameen Bank of Bangladesh "one can reasonably make a statement that people are poor today because of the failure of the financial institutions to support them in the past."

Robert Schroeder reports for MarketWatch on a hearing held yesterday by the House Committee on Financial Services - Subcommittee on Financial Institutions and Consumer Credit titled "Bank Secrecy Act’s Impact on Money Services Businesses" where concerns were expressed about some banks ending their relationships with money-service businesses because of regulatory concerns. The prepared remarks from several speakers at yesterday's hearing are available from the Subcommittee's web site. The comments of Philip Milne (PDF), president and CEO of MoneyGram International, are particularly interesting to read - ..."Two months ago Bank of America informed MoneyGram that it would be terminating its long-term relationship with MoneyGram. This was not just a simple deposit account, but rather a global banking relationship that generated millions of dollars in fees annually for Bank of America."...

On Sunday, the Buffalo News ran the first story in a four part series by staff reporters Rob Watson and Jonathan Epstein about the "high cost of being poor." The story introduction commented "every day, the working poor face a kind of Alice-in-Wonderland reality where those who can afford the least pay the most." A must read.

Carolyn Said writes for the San Francisco Chronicle about the growth in "taxpayer ID mortgage loans" being granted on the basis of the applicant's taxpayer ID, not Social Security Numbers. So called "undocumented immigrants" often have taxpayer ID's - issued by the IRS to both resident and non-resident aliens - but not SSNs. Said reports that "in California, Wells Fargo and Citibank both offer taxpayer ID mortgage loans, albeit in small programs."

The Hispanic Marketing & Public Relations blog has posted a podcast interview with Wells Fargo Senior Vice President Daniel Ayala in which he talks about his business at Wells Fargo serving Hispanics - not just for remittances but for their whole financial lives.

Fishback Financial Corporation has announced the Revel Card, a prepaid MasterCard that "takes prepaid financial services to the long-awaited point where the consumer literally carries the basic products and services found at the typical bank branch with them in their wallet." It plans to unveil the Revel Card at the Underbanked Financial Services Forum being held next week in Chicago.   » Continue Reading

The "unbanked" and financially underserved population is making its mark in the economy in a market segment that now exceeds $10 billion, according to data compiled by Phoenix ESP Payments Research Group. Phoenix reports that although this below-the-radar group may not be using credit cards to make purchases, many are turning to pre-paid cards instead, fueling an opportunity for financial services firms and retailers.   » Continue Reading

Unlimited Diversity, Inc., a provider of prepaid products and services for BankFirst and MasterCard, has announced the launch of the PODER Payroll MasterCard, a card program it says is designed specifically to address the needs of the Hispanic immigrant in the United States.   » Continue Reading

The Federal Reserve Bank of Chicago and the Brookings Institution have published a new 100-page paper titled "Financial Access for Immigrants: Lessons from Diverse Perspectives" (PDF) by authors Anna Paulson, Audrey Singer, Robin Newberger, and Jeremy Smith.   » Continue Reading

David Kaplan profiles PreCash CEO John Chaney for the Houston Chronicle. PreCash is a Houston-based company that offers a variety of payment options serving immigrants and other consumers who do not have bank accounts.   » Continue Reading

San Ramon, CA-based AccountNow has announced the closing of $12 million in their second round venture financing. The company is a marketer of MasterCard-branded and FDIC-insured stored value cards for the estimated 40 million strong underbanked consumer market.   » Continue Reading

The Institute for Public Administration at the University of Delaware yesterday held a conference titled "The High Cost Of A Low Income" to explore financial services in under-served markets.   » Continue Reading

The Center for Financial Services Innovation has announced the first of four online chats (scheduled for this Thursday, March 9 at 2 PM EST) with participants from the National Community Investment Fund's Retail Financial Services Initiative to discuss the value of check-cashing partnerships, prepaid cards, and second-chance accounts as viable acquisition and asset-building strategies, and their own experiences in designing and managing their programs.   » Continue Reading

Using the tagline "Be Your Own Bank", privately held Affinity Card Systems has announced the Ethos Visa Debit Card account claiming it is the first and only card of its kind for the financially underserved.

"ACS intends to provide an ethos branded Visa Debit Card Account to a financially underserved customer base," said Terry Lock, chief executive officer of ACS, "by offering branded cards through employers, staffing agencies, unions and government agencies that disburse funds. This revolutionary new tool can help provide the underserved with financial independence through low cost access to funds."

The October issue of the Federal Reserve Bank of Chicago's Profitwise newsletter is now available online -- and it includes two articles on the remittance market and its implications for moving immigrants towards mainstream financial products:

• Linking International Remittance Flows to Financial Services: Tapping the Latino Immigrant Market (PDF)
• Banking on Remittances: Reaching the Immigrant Market (PDF)

The Payment Cards Center of the Federal Reserve Bank of Philadelphia has announced two new discussion papers.   » Continue Reading

The Center for Financial Services Innovation has announced its nonprofit grant recipients for 2005.   » Continue Reading

Dana Sanchez reports for the Bradenton (Florida) Herald on Morgan Beaumont, a local company that has developed a national platform for loading funds onto stored value abd debit cards.   » Continue Reading

Next Estate Communications, which claims it has more than 90 percent market share with its association-branded prepaid cards, has announced that it is partnering with Walgreens to offer GreenDot prepaid cards to consumers.   » Continue Reading

The Payments Card Center of the Federal Reserve Bank of Philadelphia has released two new discussion papers:

The first, “Forum on Validation of Consumer Credit Risk Models (PDF),” summarizes the discussion from a one-day conference of the same name held on November 19, 2004 in conjunction with Wharton’s Financial Institutions Center. The conference brought together leading academics, policymakers, and industry experts to discuss the general principles management can use as keys for effective model validation and risk assessment.

The second, “The Cost Effectiveness of Stored-Value Products for Unbanked Consumers (PDF),” is based on a March 30, 2005 workshop led by Sherrie L.W. Rhine and Sabrina Su of the Federal Reserve Bank of New York’s Office of Regional and Community Affairs. Rhine and Su discussed the relevance of stored-value cards to “unbanked” or underserved consumers.

The Center for Financial Services Innovation has released Request for Proposals today for its second round of funding awards, designed to advance practical strategies to service underbanked consumers and offer them asset-building opportunities. The Center will invest in for-profit companies, as well as provide grants to nonprofit organizations.   » Continue Reading

Carolyn Said reports in today's San Francisco Chronicle on Russell Simmons' RushCard, a prepaid Visa debit card for the "unbanked" offered by Unirush Financial Services.   » Continue Reading