Underbanked

Regulators have longed encouraged banks to make small-dollar loans to people who otherwise lack access to credit. But testimony before Congress makes clear that their efforts are faltering.

An Ohio storefront alternative lender has filed for a $230 million initial public offering, as traditional banks maintain a tight-fisted approach to consumer lending.

In attempting to prevent abuses of the interchange cap exemption for reloadable prepaid cards, the Fed may have inadvertently scuttled an opportunity for banks to serve low-balance account holders.

Most prepaid cardholders are content with their cards, with nine out of 10 customers "extremely" or "very" satisfied with their prepaid cards. However, issuers could do more to keep customers for the long haul, research suggests.

A dearth of relationships with the underbanked has perpetuated the shortage of insight into how low-income consumers manage their finances. Enter the U.S. Financial Diaries.

American Express Co. is making its boldest move yet in the prepaid market by introducing a reloadable card that carries almost no fees.

Malhotra and his business partner, Yaron Ben-Zvi, Gratio's chief operating officer, got some powerful validation on Thursday, as nearly 300 attendees of the sixth Annual Underbanked Financial Services Forum in New Orleans selected GoalMine as the winner of the Core Underbanked Innovators Challenge.

New York State is considering legislation that would carve out an exception for check cashers from its 25% cap on interest rates for short-term loans, a move consumer advocates say is a backdoor attempt to allow payday lending in the nation's third-most populous state.

The applicant pool for the Core Underbanked Innovation Challenge is filled with promising ideas. Plenty of forward-thinking companies are seizing the opportunities in this area.

Banks are so busy tweaking products to shore up revenues that they're missing the most obvious revenue source — expanding offerings to the 43 million underbanked consumers.

A deal between short-term loan provider BillFloat and bill-pay provider Online Resources could boost the number of BillFloat's customers exponentially.

The emerging global markets that lack broad access to financial services likely will represent the greatest potential for mobile payments initiatives.

To earn the business of underserved groups, card companies are using high-profile personalities and organizations whose bonds with their ethnic groups are strong.

The fear is that not everyone will be able to afford a $10 or $15 a month checking account. Prepaid accounts offer banks consumers and banks alike a favorable alternative to checking.

Just as prepaid cards helped sell banklike services to the underbanked, an investment manager is planning to use similar cards to sell its products to the underinvested.

As the payday lending business contracts under heavy regulation, the key to surviving is a good hook. That's especially true online, where consumers in increasing numbers are going in search of small-dollar, short-term loans.

To make its clients more viable prospects for lenders, Maxamum — for a $25 to $75 fee — reports their payment activity on recurring bills to MicroBilt's alternative credit bureau, PRBC.

Prepaid card companies are pushing much harder to win the business of the underbanked by introducing products with lower fees.

Think Finance wanted to give underbanked consumers access to credit when they needed it, while helping them avoid a bad cycle of debt. To accomplish this, the online payday lender developed the Elastic card, a prepaid debit card with a line of credit of up to $500, that rewards consumers with lower fees for exhibiting good behavior, like making payments on time.

Those who buy prepaid cards online tend not to view them as disposable. Green Dot said it is expanding its online services to attract more of those long-term customers.