WASHINGTON (8/12/14)--Using cash for financial transactions costs more time and more money for America's underbanked and unbanked consumers, according to a recent report from the Center for Financial Services Innovation (CFSI).
CFSI released the Massachusetts Institute of Technology research, "The Technology to Advance Equal Financial Opportunity," which looked at noncash payments such as payroll cards, mobile payments or prepaid cards.
"There is a high cost of living without access to high-quality financial services," said Jeanne Hogarth, CFSI vice president of policy. The Federal Deposit Insurance Corp. estimates about 30% of Americans and up to 50% of Latino and African-American households use cash for the majority of their financial transactions.
The report cited the work of Latino Community CU, Durham, N.C., with $144 million in assets, of serving the unbanked. More than three-quarters of its members were previously unbanked and had never had any relationship with financial institutions prior to becoming a member.
The MIT study also noted El Paso (Texas) Credit Union for Affordable Housing (EPCUAH) credit union service organization, which provides thorough financial education as it integrates consumers into the financial mainstream. EPCUAH also looks at rent and utility payment histories to assess delinquencies that more often than not were due to extenuating circumstances such as unemployment or medical emergencies. Once those trials passed, most households returned to on-time payments, EPCUAH found.
Among the report's findings: