There is a bit of a strange marketing and financial services battle for a group of consumers that for one reason or another uses cash instead of debit and credit cars.
These consumers do not maintain checking accounts and either are paid in cash or mostly cash their paychecks instead of depositing them into a bank account.
Both Amazon and PayPal seem to be engaged in finding new ways to reach consumers that do not have a bank account by offering financial services that basically match checking account features.
PayPal estimates that in the U.S. alone there are about 30 million unbanked Americans, but other statistics that include underbanked, bring that number up to nearly 27 percent of the U.S. population.
PayPal’s New Strategy
Over the next few weeks, PayPal plans to launch and update services to help unbanked Americans.
- Expand the ways consumers use PayPal: The PayPal Cash Mastercard® is a free debit card with no monthly fees and no minimum balance requirement. The card will let users access the money in their PayPal account to shop online or in stores anywhere Mastercard is accepted. And users can withdraw cash from ATMs worldwide, including over 25,000 free MoneyPass® ATMs nationwide.
- More ways to add money to a PayPal account: People who don’t have a bank account can choose to directly deposit their paycheck into their PayPal account for free, so customers can enjoy the benefits of spending their PayPal balance anywhere.
Customers who enroll in these features will be eligible to receive FDIC pass-through Insurance on the funds held in their PayPal account, and there is no minimum balance required. Eighty-five percent of today’s transactions are still happening in cash and checks.
One service PayPal had for some time lets consumers load cash into their PayPal balance at over 20,000 CVS, 7-Eleven and Rite Aid retail locations in the U.S. to do activities like shop or pay their bills online. Additionally, people can now deposit checks via a mobile device more affordably and conveniently.
It will be interesting to watch how this outreach to the un- and underbanked will play out over the next few years.
Mostly these consumers stay away from banks for a variety of reasons, including lack of trust in the banking system, employment status eligibility, working for cash or tips, or good old privacy concerns.
Even if companies that are not banks offer these products, they still have to follow basic federal laws such as KYC (Know Your Customer) and report individual transactions over $10,000.
In an odd way, these services aimed at the unbanked seem to be an attempt to try to convince people that prefer to stay off the grid to embrace the grid. Which makes one wonder, will this strategy be successful?
Do you think PayPal or Amazon can succeed in this endeavor to get more people to embrace digital payments that typically prefer cash? Head over to our Facebook Discussion Group or use the comments section below.