Some payment apps can load funds onto a prepaid card and add that card to their account as a workaround for unbanked consumers, she added. Justin Sullivan/Getty Imagesįor consumers with family in other countries, sending funds through payment apps could allow them to transact through the payment app itself rather than depositing those accounts directly, depending on the circumstances, Bessette said. ATMs can be dirty, or rare in some neighborhoods. We definitely see that there is a benefit for disadvantaged ,” Li said. “It seems like these mobile applications are able to facilitate better for people’s financial management in general. Li noted that, according to her research examining payment apps and other mobile banking apps, consumers were able to better manage their money, including incurring fewer overdraft and late credit card payment fees. It made sense to hold her funds in Stripe, and PayPal made sense given that clients often use those platforms to transfer anyway, she said. For underbanked customers, in particular, mobile payment apps allow consumers to access their money without needing to go to an ATM, which can be inconvenient for people in low-income communities with fewer ATM locations nearby, Li said.įor Jones, PayPal is especially helpful to her as a freelancer because it tracks and organizes business transactions and makes it easy to search for specific transactions. Given the cleanliness concerns spurred by the Covid-19 pandemic, mobile payments have generally been used for contactless transactions and thus are better for public health, said Beibei Li, associate professor of IT and management at Carnegie Mellon University. So I feel like every payment app has different features that make it cool for unique reasons.” So why are payment apps good for people with and without bank accounts? “A lot of people just have payment apps built into their phones, like Google Pay or Apple Pay, which can be either digital wallets or a way to store money and send it to each other. “I bet Gen Zers are shooting up there really fast, because a lot of them are kind of aging into college years and probably sending money to each other that way,” said Chanelle Bessette, a banking specialist at Nerdwallet, noting that its survey came just before the Covid-19 pandemic took hold. Millennials are among the top users of mobile payment apps (94 percent), followed by Gen Z consumers (87 percent), Nerdwallet’s survey found. Mobile payment apps appear to be fairly popular among millennials and Gen Z consumers. If left unaddressed, payment apps could further replicate offline inequality for unbanked or underbanked users.Įach week we’ll send you the very best from the Vox Culture team, plus a special internet culture edition by Rebecca Jennings on Wednesdays. The Fed also noted that unbanked and underbanked consumers were more likely to have less education or to be part of a racial or ethnic minority group.Īs underbanked and unbanked consumers use payment apps to conveniently send cash to others, manage their money better, and access otherwise out-of-reach financial services, these tools can also come with costly fees, a lack of customer service, and cybersecurity risks. Among the most common reasons people use the apps are to transfer funds to family or significant others (61 percent), pay for online purchases (40 percent), and send funds to friends (37 percent), the Nerdwallet survey found.Īccording to a May 2020 Federal Reserve report, in 2019, 6 percent of adults were unbanked - without a bank account - and 16 percent were underbanked, or had a bank account, but relied on services like payday loans, check cashing services, or money orders. A February 2020 Nerdwallet survey found that nearly 4 in 5 respondents use mobile payment apps, including Venmo, Cash App, Apple Pay, and PayPal. Jones is among others who rely on mobile payment apps. She’s using the latter of the two more, because her client management software HoneyBook processes payments with Stripe. For her business transactions, she primarily uses PayPal and Stripe. So today, Jones, a freelancer who works in marketing, primarily uses three alternatives: Fidelity, PayPal, and Stripe.Īfter her mother died, Jones inherited her mom’s 401(k) account, leading her to use a Fidelity cash management account for her personal transactions. She lost her bank account after depositing a fraudulent check she received in the mail. Evelynn Jones used to have a bank account with Bank of America.
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