By Stephen Gilchrist
There is a stark reality that faces more than half of South Carolina’s black households – the fact that far too few have access to mainstream financial services. This means that hundreds of thousands of families often have to rely on costly alternative financial services like check cashers and payday lenders. However, in this unfortunate reality lies a great opportunity, one in which communities can gain greater access to financial services with simple and easy-to-use technology.
According to the Federal Deposit Insurance Corporation, more than 36 percent of South Carolina households are unbanked or underbanked, meaning they have little or no access to traditional banking services. When it comes to the state’s black households, this grows to nearly 60 percent. While sometimes by choice, this is typically due to factors largely out of their control, such as lack of credit, inability to maintain a minimum account balance or no banks in their neighborhoods.
The loss of wealth resulting from reliance on alternative financial services is staggering. The U.S. Postal Service’s Office of Inspector General found that the average underserved U.S. household spends nearly 10 percent of its income on fees and interest associated with these services.
Fortunately, there are electronic payment technologies available that provide more cost-effective tools to give all Americans access to the financial mainstream. For example, prepaid cards in the form of consumer-purchased debit, payroll or public benefit cards offer the same convenience, safety and buying power as bank debit cards – without the bank. This tool gives individuals immediate access to their money, enables online purchases and bill pay, and reduces the risk of theft.
When applied creatively to address the needs of financially underserved communities, electronic payment technology reduces reliance on cash and fringe financial institutions, and increases confidence in credible financial institutions – all of which keeps wealth in the community.
That’s one of the reasons why Master Your Card, a community empowerment program led by MasterCard, recently launched its African American advisory board. I’m proud to serve on this board, which is helping financially underserved African Americans build financial strength and gain financial inclusion through the effective use of electronic payment technology.
We’re providing input to help Master Your Card better understand the needs of financially underserved communities and small businesses, and assisting in the development of strategies, education and technology solutions to meet those needs. Most importantly, we’re working with organizations like the A. Philip Randolph Institute and the National Urban League to provide education programs to help consumers make the best choices, improve their financial habits and understand the full value of electronic payment technology.
With the smart and effective use of this technology, some very powerful solutions are now well within our reach. Armed with access and know-how, financially underserved South Carolina families can more quickly climb the ladder to financial strength and security.
Stephen Gilchrist is president and chairman of the South Carolina African American Chamber of Commerce and a member of the Master Your Card African American advisory board.