As cards, phones, and faces all become ways to pay, some retailers and restaurants want to eliminate cash as a choice for their customers in order to take advantage of the benefits of electronic payments.
Yet, the problem with eliminating a payment choice has been brought into focus by a recent bill in Washington, D.C. to make it illegal to refuse cash. As The Washington Postreported, several restaurants have eliminated cash as an option, but some lawmakers in the district worry that the poor, especially those who cannot get bank accounts, will lose access to parts of the market.
Although D.C. is considering a law to make accepting cash a requirement, other places are not as concerned about the future of cash or the options of all consumers. As companies such as Sweetgreen and countries such as Sweden make efforts to get rid of cash as a payments choice, people who cannot get bank accounts may find themselves shut out of certain options in the new digital economy.
Prepaid cards, however, can form a link between the cash economy and the digital economy, serving those who may be otherwise left out in the move to electronic payments. For people locked out of traditional debit and credit cards (and those who want to avoid them), prepaid cards offer a third option to manage money, avoid debt, and maintain a wide variety of places to shop.
Prepaid cards do not require a Chexsystems or credit check, just identification verification. So, people who have had trouble managing accounts in the past can overcome previous troubles and still participate in the digital economy. Another fact in favor of prepaid is that they typically have no minimum balance requirements, which sometimes lock people out of traditional bank accounts.
The other advantage that prepaid cards offer is accessibility. Unlike banks, which typically keep bankers’ hours and have been closing branches, prepaid cards are often distributed and reloaded in retail locations that are open much longer than traditional banks. Financial deserts exist in relation to traditional banks and credit unions, but prepaid cards can bridge that gap for individuals in those areas by offering retail reload points and access to ATMs at all hours. Many cards even have the ability to be reloaded online. These diverse points of access can be particularly important for people who work nontraditional hours.
While prepaid cards have long been a helpful financial product for unbanked and underbanked individuals, these are no longer the sole users of prepaid cards. Young adults, many of whom want to avoid taking on more debt, make up the majority of prepaid cardholders. Parents who want to teach their children financial literacy opt for a prepaid card, where money can be closely managed to avoid overspending, instead of handing over a debit card.
Consumers deserve to have options when it comes to how they manage funds and pay. The prepaid card industry is working with all consumers in mind and remains committed to offering high quality, low cost banking services that make money management easy, safe, and convenient.
Ultimately, prepaid cards can bridge a gap for people who otherwise would not be able to access the digital economy. They provide a safe, convenient alternative to cash, credit, and debit cards that can open up doors that would otherwise be closed by banks, businesses, and governments. As more businesses contemplate which payment options to accept, it’s important to give consumers as many options as possible.
Ben Jackson is the COO of the Network Branded Prepaid Card Association and previously spent nearly a decade focused on prepaid card research.
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