Episode #: 111
Show: National 10

Airdates: Jan-June 2002


A solution for the "Unbankables"

Almost thirty million people in the United States fall into the section of society referred to in the economic world as "Unbankables." These people with low incomes do not have the funds to maintain a bank account. They are hard-working Americans living from paycheck to paycheck in a world of high check-cashing fees and poor credit. One company has a unique solution that uses the efficiencies of the Internet to create on-the-fly ATM-style cash cards for these Americans.



News Desk:


Purchasing items by check or credit card has become so commonplace in today's society that most people don't even think twice about the technology involved. But, for millions of Americans, these brushes with modern money resources are non-existent. Even the act of using an ATM is outside their daily lives.

It is believed that up to thirty million people in the United States fall into this category. A section of society referred to in the economic world as the "Unbankables."

These are people with low incomes who just don't have the funds to maintain a bank account. Hard working Americans, who earn a living, but live from paycheck to paycheck, week to week, in a world of high check-cashing fees and poor credit.

The negative impact of this phenomena not only affects that segment of society involved, but can also represent a tremendous loss to the banking and credit community because of their failure to reach those potential customers.


Is there anything that can be done about this problem? The people over at VIPeCommerce.com think that they may have found a solution. It's a simple idea with a high tech twist. If they are right, they will not only provide the comfort and convenience of a credit card or bank account to anyone regardless of income level, but they also just might change the way society as a whole thinks about how they use and spend money. 

We go to _____________ for the story.

On Camera:

Just about every financial transaction conducted in the United States crosses through a service of computers, and over a network of wires and cables. When you use a credit card to make a purchase, what happens?


The merchant swipes the card through a scanner that send information via telephone wires from place to place, for computer to computer, until the data reaches its destination and is evaluated. A message is then sent back through the same system to accept the purchase.

What about when you write a check? That check goes to the merchant's bank. The information is then shared between banks over the telephone lines. At the very least, it goes from the merchant's bank to your local bank to a central bank, then to a mainframe computer, and ultimately funds are transferred via those same lines of communication.

On Camera:

Billions of tiny pieces of information go back and forth over these privately owned networks of communications, from computer to computer, 24 hours a day, over miles and miles of wire and fiber optics.


A visit to any ATM will give you the names of some of the computers that own these private networks. Names like "Cirrus," "Star," and "Visa." Companies that make money by charging a fee for every transaction that goes through their network. It's the price of doing business in America. But is there another way?

On Camera:

Yes. If VIPeCommerce.com has anything to say about it. Using a new processing platform, they see the Internet as a cheaper alternative. Simply put, those tiny pieces of information can now bypass the normal networks and operate outside the system by going straight to one website with all the information.

It may sound like a "21st" century approach to an old problem, but this idea is as old as business itself. Cut out the middle-man and pass the savings on to the consumer.

Question #1
How can the consumer get access to your service?

Answer: It's very simple. Here's how it works. You're in line at the supermarket. You pull off a plastic card from one of the "j" hooks near the candy and bubble gum. At the register, you pay the cashier the amount you want to put against the plastic card and it's loaded with your funds.


That plastic card will now operate like a debit card, drawing funds against a newly-created money account. Within seconds, your money is given to you at the time of activation. Individuals without bank accounts will no longer have to carry all their cash around with them. They can store it away until it's needed, or access it through plastic purchasing and ATM withdrawals.

Question #2
How is this plastic card different from a normal checking account debit card?

Answer: We have managed to remove some of the hassles associated with banking. Since it's all prepaid, there is no credit risk. This means there's only a minimum balance of $5.00 to handle to be maintained. Which is easy for lower income families. Also, since all the information is stored on the website for easy access, it doesn't travel over those extraneous networks. As a result, there are none of the extra fees normally associated with the services we offer.

Question #3
What is the "payroll to plastic" program?

Answer: Using this processing platform, employers can, if requested, directly deposit a paycheck into a worker's plastic card. So, on payday, those without a bank account do not need to first go somewhere to cash that check at a cost of two to five dollars of that employee's income.

Question #4
Is there any advantage for the employer to utilize this "payroll to plastic" program?

Answer: In addition to being beneficial to the worker, it can also save the employer a little money. Currently, the average employer spends an estimated $1.50 or more on every processed check. That's the money involved to purchase the materials, to physically write up the check, and to deliver that check either by mail or by hand. Thus, if an employer switches over to this payroll method, he saves an average of 70 cents for every employee, ever week.

Question #5
Are the merchants willing to adopt this new technology?

Answer: Yes, there's already interest from some of the top retailers in the United States for the simple reason that our processing platform with our plastic cards is not as expensive to operate and maintain as the credit card and traditional debit card products that are already in place, being used every day.

Question #6
What are some of the expenses of traditional credit cards for the merchants?

Answer: Currently, for the ability to honor credit cards, merchants must pay an additional fee of 2% on the sales price for every item or service charged, plus an additional 10 to 25 cents per transaction. On top of that, the actual credit card "swipers", the machines used to scan the cards, cost about $40 to $80 a month to lease per unit. And let's not forget that each swiper must have its own dedicated telephone line, which costs money to install and maintain.

Question #7
How is your processing platform less expensive?

Answer: There are no transaction fees to the merchant for accepting our plastic cards, if they connect directly to us via the web. The Internet appliances used to swipe the cards can plug into a single Internet access point. Whether you are a small business owner or a corporate giant, you will save money with this processing platform.

On Camera:

VIPeCommerce.com also feels that this breakthrough in technology may have ripple effects around the world. It could even bolster economic growth in other countries, for example it would be up to $250 million more dollars a week pumped into the Mexican economy each week, or $7.8 billion a year. Wow. For Business World News, I'm _______ reporting from Chesterton, Indiana.


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