The cost effectiveness of stored-value products for unbanked customers

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.