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Thursday, July 21, 2016

ETA expands focus to underserved sectors

Growing adoption of mobile and web-based technologies to deliver services has highlighted the need for worldwide access to digital technologies. This is particularly true in developing countries lacking adequate connectivity and infrastructure. How Fintech is Addressing the Needs of the Underserved, published July 21, 2016 by The Electronic Transactions Association shares solutions designed by member companies to address the needs of underserved populations.

The global trade association’s white paper details how technical advancements can potentially benefit underserved consumers and their communities through a range of “safe, convenient, and rewarding payment solutions and lending alternatives.” The solutions are built around core values of access, affordability, convenience, security and financial literacy.

“ETA and its members support an inclusive financial system that provides high quality, secure, and affordable financial services for the broadest possible set of consumers,” the report authors wrote. “A goal of ETA member companies is to continually enhance the electronic payments and financial ecosystem so that it is accessible for all consumers, while ensuring their transactions can be completed securely, efficiently and ubiquitously.”

Expanded services, solutions menu

The expanding fintech sector, which the ETA white paper defined as “new technologies that expand financial offerings for consumers, lower costs, improve financial management, and increase transaction security,” has used innovative technologies to solve common problems faced by underbanked consumers. Following are cases cited in the report:

  • Mobile payments: 87 percent of U.S. adults own mobile phones; 77 percent of those are smartphones capable of enabling various forms of e-wallets and mobile payment schemes, according to the study.
  • Online small business lending: Nonbank lenders are increasingly leveraging algorithms and alternative forms of credit analysis, improving access to working capital for small and midsize business owners. “This critical access to capital allows business owners to invest in their employees, purchase more inventory, expand their services and ultimately grow their businesses,” the authors wrote.
  • Prepaid products: Prepaid cards are an effective method to provide secure electronic payment schemes to underbanked consumers, moving them closer to mainstream financial services, the report stated.
  • Mobile banking: Report research indicated that mobile banking is widely available to large populations of underserved consumers, including disabled consumers who benefit from select technology features such as “touch screen-only accessibility” features that enable people to single-tap a screen to identify and activate audible buttons.
  • Peer-to-peer (P2P) payments: P2P payment schemes have become popular among millennial consumers as a way to easily and securely split tabs at restaurants or pay each other. Venmo, a P2P lending app offered through PayPal Inc., processed $2.1 billion in the third quarter of 2015. Forrester Research predicted P2P payments will reach $17 billion by 2019.
  • Expanded Internet access: “ETA member companies are working to expand affordable access to the Internet in underserved communities by improving the infrastructure and reducing the costs so that more people can connect to the web-based world,” the report stated.
  • Interactive, automated tellers: The movement toward automated, mobile branch banking has improved access to financial services for all demographic groups. The ETA report noted that having 24-hour interactive banking services is especially valuable for low-income consumers who work non-typical hours, are disabled or live in remote communities.

  • Financial literacy and readiness: A proactive approach to helping consumers improve access to financial services ensures that they will be well-equipped to manage these services as well by effectively managing and planning for productive financial futures.

Support needed from Capitol Hill

The Washington, D.C.-based ETA is also continuing its important work with legislators to ensure that U.S. government policies will enhance these far-reaching initiatives, improving access to financial services for all Americans. “A key driver to achieving such a system is the development of new technologies that allow the underserved to access FI and fintech company financial products and services,” the report stated. “ETA encourages policymakers to support these goals through policies that support innovation and the use of technology in financial products and services.”

Additional insights from the ETA’s How Fintech is Addressing the Needs of the Underserved will be cited in an upcoming lead article that explores how emerging payment technologies are reshaping traditional methods of selling and implementing merchant services. end of article

Editor's Note: Additional insights from the ETA’s How Fintech is Addressing the Needs of the Underserved will be cited in an upcoming lead article that explores how emerging payment technologies are reshaping traditional methods of selling and implementing merchant services.

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