4 ms·
People are often unbanked [in the US] because bank accounts are associated with: - Minimum balance requirement - Direct deposit requirements - Fees & penalti
by anthony_romeo 5y ago
People are often unbanked [in the US] because bank accounts are associated with:
- Minimum balance requirement
- Direct deposit requirements
- Fees & penalties
People in poverty without steady incomes don't have the liquidity to open accounts and keep them open without incurring penalties.
- hn_throwaway_99 5y agoAs someone in the fintech industry, this isn't accurate. There are a sizable number of services that offer no-monthly-fee, no-minimum-balance accounts. The real reason people are often unbanked is that these types of accounts tend to have extremely high fraud (or at least attempted fraud) rates. As such, their KYC requirements as well as their fraud systems will kick out people, for example, who have a substantial past history of overdrafts. I'll be blunt: it is extremely difficult to service this population of users profitably. Their balances are low, they're more likely to use less "automatable" forms of service (e.g. no direct deposit but instead sending in physical checks or cash), and their fraud rates are much higher. Which, given that, is why I'm very much in favor of a government service that would provide banking services to this population at cost.
- JetSpiegel 5y agoHow can you claim their fraud rates are higher, when they have no accounts?
- anthony_romeo 5y agoThanks for that perspective.