Smart financial choices are tough, even for the savviest consumers. With more choices than ever before on how best to manage money, getting honest information is critical for success.
Unfortunately, that information can be hard to find. Outdated facts, product misperceptions, and outright bias threaten the consumer’s ability to find the knowledge they need to make smart choices.
Critics of prepaid accounts have been left behind by the rapid transformation taking place in payments. Like all industries, the payments sector had its growing pains, but the community kept innovating, learning, and working with policymakers to bring innovative, accessible, and lower-cost products to market. This evolution has been noticed, with prepaid and fintech products becoming a staple in recommendations by experts like the Financial Health Network (formerly CFSI).
A key factor in the growth of the payments industry was legitimate criticism from consumer advocates, policymakers, and consumers. When critics argued that fees were too high, the industry responded by reducing fees and enhancing features. When critics argued the industry wasn’t regulated, the industry supported the CFPB prepaid regulations. Regulations give individuals the peace of mind that the product they are using has consumer protections – just like any other bank account. Competition also has spurred this evolution, as companies entered the marketplace with new ideas and competing products, ultimately benefiting the consumer. That’s how real progress is made.
All of this progress can be undone quickly by misconceptions and old stereotypes. These distract from core issues, confuse customers, and may undermine the ability of both sides to engage in a fulsome public policy discussion. Legitimate, thoughtful criticism, which leads to the open exchange of ideas and progress, is more than welcome.
Today, there is no question that the innovative payments community has led the way in providing services to millions of Americans, including people who had trouble accessing traditional financial services due to low income or past credit trouble. Millennials and Gen Z consumers have new technologies that give them more control over their money. Governments (federal and state) who need an efficient way to disburse benefits have adopted new payments forms to better serve their constituents. In short, prepaid accounts are mainstream banking products. A recent Pew Report classified prepaid products as “Traditional,” along with debit and credit cards.
Individuals are constantly looking for better ways to manage their money. Holding on to outdated business practices negatively impacts consumers. Attacking the use of prepaid accounts – utilized by all segments of the American population – fundamentally ignores the realities of our financial landscape. Innovative payments options are safe, regulated, consumer friendly, and here to stay. It’s time for the banking world to take notice.