New York is the latest city to introduce a municipal identification card in a move that community advocates hope will help thousands of undocumented immigrants and other unbanked individuals open bank accounts.
The city has enlisted 11 financial institutions, including four community banks, to accept the ID as a primary form of identification for opening accounts. New York will also spend $8.4 million to roll out the program and include a number of benefits, including discounts at museums, movie theaters and pharmacies, to attract users.
New York joins a growing list of at least a half-dozen cities and counties to roll out some form of local ID since New Haven pioneered the concept in 2007. Los Angeles' City Council approved issuance of an ID card in 2012, but it remains in the development stage.
"For decades, immigrants have had a difficult time accessing banking services that allow them to create savings accounts, pay their bills, and build credit," New York Assemblyman Marcos Crespo said in a prepared statement. "I encourage all of New York City's financial service institutions to accept the IDNYC."
To be sure, banks and credit unions accepting IDNYC will still require more identification, such as an individual taxpayer identification number, also known as an ITIN, but the municipal card "will reduce at least one of the challenges undocumented immigrants face when seeking to access mainstream financial services," said Brian Doran, regional executive and director of government affairs at the $7.1 billion-asset Popular Community Bank in New York.
Popular, a unit of Popular Inc. in Puerto Rico, has yet to receive formal guidance from regulators, but Doran said the company has received enough positive feedback to "make it comfortable with rolling this out now."
The other banks that have agreed to accept the IDNYC card as primary identification are the $3.6 billion-asset Amalgamated Bank, the $646 million-asset Carver Bancorp and the $105 million-asset Spring Bank. Seven credit unions have also agreed to accept it.
Amalgamated is hoping its decision to accept the IDNYC card will help it attract undocumented immigrants, said Keith Mestrich, the bank's president and chief executive. "We're a city of immigrants and many immigrants have difficulty obtaining an ID card," Mestrich said, adding that he is "highly confident" the IDNYC card would pass muster with regulators.
The IDNYC card "is an important step toward access to mainstream banking services for many unbanked New Yorkers," Michael Pugh, Carver's president and chief executive, said in a prepared statement.
A call to Mayor Bill de Blasio's office was not returned, while efforts to reach Spring Bank were unsuccessful.
Community advocates have repeatedly expressed hope that municipal ID cards would make it easier for undocumented immigrants and other underbanked groups to open bank accounts. To date, the cards have fallen short of such expectations, in large part because only a handful of banks and credit unions have agreed to accept them.
In New Haven, an October 2013 city report found that just one bank the $70 million-asset Start Community Bank accepted the Elm City Resident Card as a primary form of identification for opening accounts. In San Francisco, which introduced its SF City ID Card in 2009, city records indicate just six credit unions, and no banks, recognize the card.
Oakland, which unveiled its city ID card in 2013, moved in a different direction, designing its card to serve a dual purpose: ID card and prepaid debit card. Paula Cruz Takash, who helped design Oakland's card, said a lack of enthusiasm among area banks forced her group to alter plans for an ID only product.
"Our whole approach is much broader" than ID-only cards, said Cruz Takash, who serves as director for business development and financial inclusion at SF Global, the payment processing firm that helped Oakland roll out its card. "We wanted to provide the cardholder with a suite of high-quality financial products."
The debut of the IDNYC card was a "happy day" for New York's unbanked population, Cruz Takash said, though she added that many struggle with problems that go beyond bank access. For people of limited means, or those who are on a blacklist due to unpaid debts, "a prepaid card makes sense," she said, adding that more than 5,300 people have signed up for Oakland's card.
SF Global is working with Richmond, Calif., to offer a hybrid municipal ID card, Cruz Takash said. The card is set to debut in February and, to date, more than 300 people have applied.
Doran said he was hopeful more banks would agree to accept the IDNYC card. He noted that other cities' ID cards have yielded a disappointingly small number of new accounts, but he said New York's large population gives it a better chance of success. By agreeing to accept the ID card, Popular's 31 branches in the city could potentially attract thousands of new clients.