Will Consumers Dump Banks for Retailers?
American consumers, it seems, have grown increasingly distrustful of banks and many are turning to other sources for financial services.
An article on the Bank Investment Consultant website with a “sound the alarm” headline, New Walmart Kiosks Present Threat to Banks, suggested that a large amount of dollars that pass in and out of financial institutions could get sucked up by the retailer.
“Retailers should shake in their boots, banks should shake in their boots,” Brian Riley, a research director at TowerGroup, told Bank Investment Consultant. “Because if Walmart starts linking their kiosks to doing reloadable gift cards, they have the power to move a lot of transaction money.”
A piece on The Christian Science Monitor website citing the Mercator Advisory Group said the amount of dollars put on prepaid cards will reach $552 billion next year, up from $330 billion three years ago.
Prepaid cards through Walmart and others appeal to the millions of so-called “unbanked” consumers across the country. Cards are used by many in the same way that banking customers use checks and debit cards.
Prepaid cards have gone mainstream by catering to the ranks of the unbanked — people who don’t have a bank account. Nearly one in five Americans are unbanked, a 2009 government report found, and the number is growing.
Not wanting to be left out of this big and growing business, American Express announced this week that it is offering its own prepaid card.
- Prepaid cards: once a niche, now mainstream – The Christian Science Monitor
- New Wal-Mart Kiosks Present Threat to Banks – Bank Investment Consultant
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