Retailers Court Unbanked Customers With Financial Offerings

With millions of Americans eschewing bank accounts, more merchants are providing banking services to customers.

February 02, 2011

TROY, Mich. - More retailers are offering customers financial services as the rolls of the "unbanked" reach into the millions, the Washington Post reports. For example, Kmart stores in California, Illinois and Puerto Rico have begun offering prepaid credit cards, money transfers and check cashing services.

Shoppers can pay cable, phone and utility bills at kiosks in Best Buy stores, while Wal-Mart has around 1,500 MoneyCenters within its stores that process up to 5 million financial transactions weekly.

These and other retailers have brought the $320 billion alternative financial services industry into the mainstream. While the new Consumer Financial Protection Bureau will oversee parts of that industry, it??s still murky how much power the bureau will weld over retailers.

Analysts predict that demand for these services will continue to soar as banks start to charge more fees for checking accounts, forcing many households to seek alternatives. "We're in a place where large banks are becoming more conservative," said Kimberly Gartner, vice president of market services for the Center for Financial Services Innovation. "Consumers are a little disgruntled with banks, so there's a real opportunity here to attract more customers."

A recent government survey found that close to 30 million households do not have a bank account or only use one sporadically. Close to 70 percent of "unbanked" families have annual incomes under $30,000 and many say they will not use a bank ever.

Advertisement
Advertisement
Advertisement