The Cost Effectiveness of Stored-Value Products for Unbanked Consumers

14 Pages Posted: 30 Aug 2006

See all articles by James McGrath

James McGrath

Federal Reserve Bank of Philadelphia

Date Written: May 2005

Abstract

On March 30, 2005, the Payment Cards Center hosted a 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 to discuss the relevance of stored-value cards to "unbanked" or underserved consumers. The authors framed the issue by first examining the characteristics of the unbanked before describing the particular card products that may be the most relevant for providing financial services to such consumers. While limitations remain, including an unsettled legal and regulatory landscape and the challenges associated with providing credit reporting and asset building features, the authors concluded that these products can offer a cost-effective means for unbanked customers to access financial services outside of a traditional banking relationship.

Keywords: Stored-value cards, Unbanked

Suggested Citation

McGrath, James, The Cost Effectiveness of Stored-Value Products for Unbanked Consumers (May 2005). Federal Reserve Bank of Philla Payment Cards Center Discussion Paper No. 05-06, Available at SSRN: https://ssrn.com/abstract=927073 or http://dx.doi.org/10.2139/ssrn.927073

James McGrath (Contact Author)

Federal Reserve Bank of Philadelphia ( email )

Ten Independence Mall
Philadelphia, PA 19106-1574
United States