Is cash still king? It may advantage a home buyer in a bidding war, but the question is: Is cash cost-effective? And is the study released by Tuft’s University in 2013, a trend?
According to their The Cost of Cash in the United States, “using cash as opposed to a debit or credit card is costing consumers and businesses both time and money. Specifically, Tufts estimates that using cash increased businesses costs by $55 billion in 2013, with retail theft being the largest single factor. It also lent to $101 billion in missed tax revenue because of off-the-books transactions. Ultimately, using cash over credit cost U.S. households $43 billion, with most of those costs deriving from time spent accessing their cash. Amazingly, the authors of this report characterized their cost estimates as conservative.”
Where do prepaid cards fit in this picture?
The report goes on to address how it appears that, “those who are underbanked or in the lower income tiers tended to be at the highest risk of being charged fees for accessing their cash. At the time of the report, the average fee for a non-network ATM was $3.85. As of October 2015, based on data from Bankrate, that figure had jumped to $4.52 per out-of-network ATM transaction”.
Here at rapid! PayCard, we built a business that endeavors to support companies, their employees, and their financial institutions. We provide a comprehensive paycard technology platform. It serves as a foundation and works to build real value for our clients to support savings of expenses like the costs of paycheck and wage statements.
With the middle class consistently striving to make ends meet as the baby boomers are finding themselves replaced by much younger and cheaper counterparts with increasing regularity, many Americans are more vigilant about their finances than ever. Not only about what things costs, but the costs of those costs.
What’s the Good News
While this article in the Motley Fool cites that “consumers with payroll cards do tend to have higher average cash access costs than consumers that don’t have payroll cards” – the FDIC survey shows that “unbanked households with a prepaid debit card are far more likely to open a bank account (47%) than those households that don’t have one (32.6%). Since the costs to access wages via direct deposit are considerably lower to all parties involved, these figures would suggest that prepaid debit cards are a stepping stone to a bank account for many unbanked and underbanked households”.
The opportunity to connect with these clients presents as a worthwhile one for financial institutions and companies like ours to recognize and support this sector.
From a business perspective, the prepaid debit cards can typically cost banks less than traditional checking account transactions. So…cash is still king, it’s now just about learning how to navigate the kingdom.
The rapid! PayCard® MasterCard Card is issued by MetaBank®, Member FDIC, pursuant to a license by MasterCard International Incorporated. Prepaid card can be used wherever Debit MasterCard is accepted. MasterCard is a registered trademark of MasterCard International Incorporated.
The information contained in this article and any other article do not reflect the views of rapid! PayCard®.