This demographic in the United States is now seen to be a key player in the growth and success of the transactions.
Current estimates show that in the United States, there are 68 million people who are considered to be underbanked, and the majority of them are highly familiar with cell phones, which makes them ideal candidates for benefiting from what mobile payments have to offer.
This can mean that if the market is able to crack this demographic, it could have the potential for tremendous growth.
The primary hurdle facing those who would offer mobile payments to that market will be to be able to deal with and overcome the regulatory and scaling barriers that are currently in the way. The underbanked market is the result of a trend that occurred following the first Great Depression. At that time, the Banking Act of 1933 was signed by President Roosevelt and created the Federal Deposit Insurance Corp. That was meant to provide account holders with insurance protection that would stop them from losing everything should another crash occur.
At that time, the unbanked, a prime market that could now benefit from mobile payments, was born.
This occurred because while most people in the United States conformed to the new way of banking, a small fraction decided to rely on a strictly cash based economy, instead of stepping in line with the majority. The financial industry called this group the “underbanked” and this trend has continued but meaningful segment of the population.
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After all, 68 million people is nothing to ignore and means that there could potentially be tremendous use opening up for smartphone users through mobile payments. This is because, according to the data from the Federal Reserve Board’s research, the underbanked in the United States have a greater smartphone and mobile adoption rate than the nationwide average.
Moreover, not only are they more likely to own one of these devices, but they are also less likely to subscribe to home internet service so that they will be more heavily reliant on their smartphones in order to conduct everyday online activities such as money management and paying bills. Therefore, it is the underbanked who could make a massive difference in the adoption rate of mobile payments.