Nonprofit Distribution of Prepaid Cards
March 1, 2008
- Michael J. Herrmann; Rachel Schneider
This report explores experimentation in nonprofit distribution and marketing of prepaid debit cards to underbanked consumers. We focus on three community organizations to discover the potential role for such groups in distributing financial services.
Community organizations play a critical role in the lives of their members. By providing a variety of services such as credit counseling, legal assistance, and employment training, they seek to directly improve the lives of their members. Nonprofit community-based organizations have begun to explore their possible role in distributing prepaid debit cards to members. By distributing prepaid debit cards to their members, they are seeking to provide members with a convenient, cost-effective financial tool that will, in turn, strengthen member participation and a sense of shared ownership.
This paper explores how three such organizations—the Center for Community Change, the Consumer Credit Counseling Service of Delaware Valley, and the Service Employees International Union—are combining a new product, prepaid debit cards, with new marketing and distribution methods to provide economical and convenient financial services to their communities. These organizations serve many people who have low incomes, often lack bank accounts, and frequently use check-cashing services. As a result, their costs for the services can often be high and the ability for saving and asset building is limited.