Consumer Finance

For Underbanked, Higher Fees And Auto Payments

There are 67 million adults in the United States who are part of the “underserved” market, and those individuals, who do not have bank accounts, paid as much as $141 billion in fees for various financial products last year.

Those are among the findings of the sixth annual Financially Underserved Market Size report that was released jointly last week by the Center for Financial Services Innovation and Core Innovation Capital.

The study found that border trends are afoot, as those individuals have begun shifting some of their financial activity, traditionally tied to alternative financing, in part away from online payday firms and storefronts. Activity has, in fact, moved toward other conduits, such as small business marketplace lenders. Marketplace loans jumped by as much as 210 percent, and payday loans across storefront and online conduits slipped by 23 percent — a finding the study attributed to installment loans, or subprime cards, in the wake of regulatory pressures.

The total financial activity logged by the group as a whole came to $1.6 trillion in terms of volume, up 4.3 percent over 2014.

In terms of longer-term credit fees and charges, the underserved segment spent as much as $55 billion. And, said the study, rates paid for auto insurance, which is the bulk of that longer-term credit pool, at $36.5 billion, are on the upswing. The study found that underserved drivers, on average, spend more than 26 percent more than traditionally banked drivers for vehicles of similar value.

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NEW PYMNTS DATA: HOW WE SHOP – SEPTEMBER 2020 

The How We Shop Report, a PYMNTS collaboration with PayPal, aims to understand how consumers of all ages and incomes are shifting to shopping and paying online in the midst of the COVID-19 pandemic. Our research builds on a series of studies conducted since March, surveying more than 16,000 consumers on how their shopping habits and payments preferences are changing as the crisis continues. This report focuses on our latest survey of 2,163 respondents and examines how their increased appetite for online commerce and digital touchless methods, such as QR codes, contactless cards and digital wallets, is poised to shape the post-pandemic economy.

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