Initiatives to address the challenges of the unbanked generally fall into two areas: they aim either to broaden access to financial services or to provide education on the sensible use of those financial services that are available. Access and education are the twin pillars of financial capability, and the Direct Express® program offers both.

In terms of broader access to financial services, Direct Express® provides a level of capability that unbanked cardholders would not otherwise have – a capability that saves them money. In a benchmark FDIC survey, a defining characteristic of the unbanked is the use of “non-traditional” financial products, including check-cashing services. The check-cashing trade group, Financial Service Centers of America (FISCA), reports that its industry provides more than $50 billion in check-cashing services per year. Fees allowed for this service vary by state regulations, but it is not uncommon to see fees of 2 percent or more—even up to 5 percent of the value of each check cashed.  For an unbanked Social Security recipient cashing a $700 check, fees might range from $14 to $35 per check—adding up to hundreds of dollars each year.

As a network-branded prepaid debit card, the Direct Express® Debit Mastercard® frees cardholders from the need to cash checks, saving them money. Instead, the 4.5 million Americans that receive Social Security, veteran’s benefits, and other government payments loaded directly onto a Direct Express® card can access their funds for free. Cardholders can then use that money to make purchases or pay bills in person, online, or by phone, and to withdraw cash at virtually any bank branch in the country or at tens of thousands of ATMs.

We estimate that Direct Express® saves Americans between $100 million and $500 million in check-cashing fees annually, assuming around 4 million unbanked payees per month and the and the almost universally allowed check-cashing fee of 2 percent. That’s between $100 million and $500 million each year that Direct Express®cardholders can use to improve their lives and those of their families, rather than pay out to access their funds. This demonstrates Direct Express’® role in bringing millions of Americans closer to the financial mainstream.

Financial capability also relies on education, which Direct Express® delivers through the PayPerks financial literacy curriculum available to all cardholders for free. PayPerks provides online instruction on a variety of topics, including budgeting, safe card usage and more. These are intended to help beneficiaries understand how to access all of the valuable features and benefits of their cards with minimal fees (it is easy to use the card in ways that incur no fees at all) and high levels of convenience. This training is enhanced by the program’s mobile app, which allows smartphone access to account information and other services that help cardholders better manage their money.

These twin pillars of financial capability have significant benefits for the people who use Direct Express®. It is always better to hear things like this first hand, so in conclusion, we link to a video of Dawn, a cardholder from Tacoma, Washington, tells of her experiences with the card and its integrated PayPerks financial capability platform.

Program Staff,  Mastercard