We are living in an era where the bulk of Americans pay bills and purchase products and services with a few keystrokes and the click of a mouse or, even easier, a swipe on their smartphones.
However, what many of those people don’t know is that there is still a broader segment of the population in often lower-income urban areas like Detroit, Miami and Newark that are under-banked and simply unable to take advantage of these technological advances.
That under-banked segment of the population, while often an afterthought, makes up a significant share of the market and many small retail businesses in the inner city areas of places like Miami, Newark and Detroit survive by selling into that group.
According to data published by the Federal Deposit Insurance Corporation (FDIC):
- 7.7 percent (1 in 13) of households in the United States are unbanked. This proportion represents nearly 9.6 million households.
- 20.0 percent of U.S. households (24.8 million) are under-banked, meaning that they had a bank account but also used alternative financial services (AFS) outside of the banking system.
- Among households that recently became unbanked, 34.1 percent experienced either a significant income loss or a job loss that they said contributed to the household becoming unbanked.
- Among households that recently became banked, 19.4 percent reported that a new job contributed to their opening a bank account.
Still, there unfortunately are those in this segment of the community take advantage of small business owners by writing bad checks in the hopes that some merchants have no way to verify the legitimacy of their accounts.
As a business owner with a significant portion of customers in unbanked or under-banked communities in places like Detroit, Miami and Newark, the dilemma is trying to serve the market by giving customers payment options beyond cash while still protecting the interests of the business. After all, the FDIC reported that under-banked adults receive more than $1 trillion each year in payments from employers and government agencies.
For business owners that receive checks from the under-banked and worry about their legitimacy the best option is to use a check verification service with a track record that can be trusted.
The use of check verification services significantly reduces returned transactions, saving business owners money on payment processing while protecting their accounts. Check verification gives the business owner a clear view into the trail of money. It can be used to check the history on a bank account or confirm if the account is open, in good standing and if there is a history of bad checks being written on the account. Check verification services can also confirm if there is actually money available in a bank account.
ArJay Data’s Bank Network and Check Verification service helps business owners in inner city regions such as Detroit, Miami and Newark ensure that the checks they receive will not bounce. ArJay has been serving retailers in more than 100,000 locations over the past two decades and we continue to help fight check fraud’s effect on small businesses.
ArJay Data’s technology enables it to accesses the leading check databases in the country – over 13 million current unique records from over 71,000 locations across the country. Data from ArJay’s Bank Network and Check Verification databases lets merchants know if their customers have any bounced checks as well as their customer’s bank account status. In addition, merchants can contribute their own bad check data to the databases.
Rather than continuing to question the legitimacy of every check or, worse, stop accepting certain forms of payment all together, ArJay is a good alternative to serve the under-banked in a legitimate and safe way for all parties.