By Steve Taylor

Rarely a day goes by without news of a mobile payments innovation entering the market. Whether it’s designed to facilitate a payment, manage rewards and offers, conduct online banking, or organize financial apps, the list continues to grow as companies work to secure their place in the mobile wallet ecosystem.

However, as we watch the mobile wallet revolution unfold, there are two segments of the population that are largely being overlooked. First are people who don’t have a bank account or credit card, often referred to as the unbanked. Second are consumers with limited traditional banking relationships, known as the underbanked.

According to the Federal Deposit Insurance Corporation, more than one in four American households are either unbanked or underbanked. There are millions of such people in the US. Many are living payday-to-payday and can’t, or don’t choose, to qualify for a credit card. So, based on sheer numbers, it’s surprising that there aren’t more mobile financial services targeted at this group of consumers.

On the other hand, maybe it’s not so surprising. Historically, people with the least amount of money and free time pay more and have fewer convenient options to do simple things like pay bills or access their pay packages.

The few current mobile solutions for these segments of the population attempt to solve this problem with remote cheque deposit or bill payment, but those solutions require a credit card, lack the necessary speed, and frankly are just too expensive.

People living from payday to payday simply cannot wait two to six days for a remote cheque deposit to clear. Additionally, the few mobile bill payment services that don’t ask users to wait this long require a credit card charge of US$3 to US$5 per bill. And consumers often pay US$15 to expedite bill payments.

As new mobile applications are launched, they must be designed to solve a problem and do so in a way that makes sense for the intended user. To accelerate adoption with the unbanked and underbanked, apps should be easy to use and must reduce the friction of how people currently do things.

For example, if users need to cash a cheque and pay a bill, it only makes sense that they can do both easily at the same time using a mobile app just like they currently do at a retail location. However, if they face a charge in order to pay bills using their smartphone, but still need to cash their cheque at a store to get their cash immediately, then they’ll probably continue to do both transactions at the retail location.

We’ve learned many of these lessons working with the unbanked and underbanked over the years. The lessons were important in the development of our FlipMoney mobile wallet.

We believe that a person making US$30,000 or less a year should be able to pay bills or get their salary just as easily as someone who makes millions.  The evolution of mobile technology has tremendous potential to empower these consumers.  

In fact, unbanked and underbanked consumers are already adopting mobile phones at a faster rate than the general public. Remarkably, 57 percent of people with limited banking and credit relationships already have a smartphone, compared to 44 percent for the rest of the population according to the Federal Reserve. So, it’s quite clear that the market potential for mobile payments apps that are sensible, affordable and built with the user in mind is tremendous.

Steve Taylor is the CEO of PreCash

The editorial views expressed in this article are solely those of the author(s) and will not necessarily reflect the views of the GSMA, its Members or Associate Members.