Are You Alienating a Big Segment of Potential Customers?

If you ran a restaurant, would you turn away patrons that weren’t able to pass an at-the-door credit check with flying colors? Or, if you ran a convenience store, would you halt anyone at the door who didn’t fit into an upper-echelon earning bracket?

Making a habit of turning away interested consumers can be a risky undertaking for many businesses that count on a loyal customer base to keep them afloat. And setting that precedent with someone who may later bring in additional business may introduce a troubling pattern.

As criteria and qualifications beleaguer customers, turndowns for checking accounts have become a normal practice at financial institutions. With so many hoops to jump through, the unbanked are beginning to believe opening an account is not a realistic option. According to a 2011 National Survey of Unbanked and Underbanked Households conducted by the Federal Deposit Insurance Corp. (FDIC), more than 30% of those who responded said they are avoiding an attempt altogether, believing they do not have enough money to open an account. But through prepaid cards, the power of the cardholder has been expanded to include those who may not find paper checks and checking accounts as realistic options. With a variety of products to fit the needs of customers who are looking to manage money and obtain a usable debit card, prepaid reloadable options fit the bill.


A variety of prepaid options can help keep these underbanked and unbanked consumers in your institution’s doors, as opposed to seeking financial services elsewhere.

For starters, prepaid reloadable cards often protect customers against over-drafting. If the money isn’t there, a swipe will yield a halting response. Also, for many working customers, carrying a plastic card could equal financial freedom. With many underbanked consumers bringing their paychecks to cashing businesses and losing a chunk of their pay in the process, prepaid reloadable cards’ direct deposit feature is attractive to someone looking to maintain their net wages and spending power.

Plus, with the various card options available, other segments of your customer base (other than the underbanked) can find additional assistance as well. Travel cards serve as the ultimate replacement for the now archaic traveler’s check, offering companion cards for increased spending outlets and many features of a reloadable card for on-the-go financial access and fraud protection. And youth cards bring in younger customers that need a crash course on proper money handling, under the able supervision of a parent or guardian, in an increasingly plastic and online spending world.


The FDIC’s survey showed that those customers who are being turned down in traditional banking settings are looking for Alternative Financial Services (AFS) to meet their needs.

  • One in five, or 24 million households, in the United States are underbanked or relying on AFS for banking.
  • One in 12, or 17 million, adults in the United States are in unbanked households, or those lacking any kind of deposit account.
  • 1/4 of U.S. households utilized an AFS in the preceding year, with one in 10 relying on two or more types of AFS.

With AFS providers stepping up to serve the underbanked, an entire segment of consumers is learning to seek financial solutions outside of banks and credit unions. Prepaid debit cards come from a variety of associations and are accepted wherever debit cards are accepted. With a reloadable card, a user can spend in-person or online and can track spending on the go via the Web.

The flexibility of this alternative option is very evident to users.


Consumers are in need of financial solutions, and if a financial institution doesn’t offer what they need, they have ample alternatives from big-box retailers, supermarkets, pharmacies, and convenience stores. Tech-savvy consumers learn quickly – go where the best options are. Do financial institutions still mean the same thing to a consumer with know-how of choice?


So why eliminate potential future customers that may eventually bring a variety of other financial requests – from loans, to CDs, to credit – when you can keep them within your institution’s walls by offering prepaid reloadable products as a viable account option? These cards keep those that don’t qualify for a standard checking account in the fold. You build loyalty early and can expect to have the loyalty repaid with future banking needs. Plus, the positive word-of-mouth can’t hurt – offering a variety of solutions to fit every customer can lead to a reputation that precedes you.

Offering this product side-by-side with your other traditional account-opening choices allows your customer base to fall under a much wider financial umbrella. With something for everyone, more people are served and more customers will go in and out of your institution doors.

If you’re interested in offering prepaid cards to your members, click here!

Michael S. Colston

Michael S. Colston

Michael S. Colston is Regional Vice President of SWBC’s Financial Products division. He is responsible for marketing, selling, and implementing SWBC’s credit/debit card merchant services and card ... Web: Details