Op-Ed: Electronic Payment Technology Paving the Road for Economic Opportunity

Electronic Payment Technology Paving the Road for Economic Opportunity

For millions of people across New York City’s five boroughs, each morning begins with an essential commute via bus, subway or train. But for the 20 percent of New Yorkers living below the poverty line, affordable public transportation is about more than just getting from point A to point B.

For these New Yorkers, public transportation is a lifeline – an essential point of access to greater economic opportunities. And, just as the daily commute for most is an intricate system of subway lines, buses and trains that must run in sync to keep travelers on track, the journey to financial inclusion and economic vitality is not achieved through one avenue alone. Access to basic financial resources is also an important part of New York City’s greater economic prosperity.

According to the Federal Deposit Insurance Corporation (FDIC), more than 2.4 million households in the New York City area are unbanked or underbanked, meaning they have no or only limited access to traditional banking services. With no checks to pay bills and no debit or credit cards, living on society’s financial fringe is not only a huge inconvenience, but it is also incredibly costly. The Center for Financial Services Innovation found that in 2015 financially underserved consumers spent $4.9 billion and $2 billion on the fees and interest associated with pawn shops and check cashers, respectively.

I’ve seen firsthand the effect these services have on the families who can least afford them. High costs and interest rates for borrowing money and cashing paychecks pose significant roadblocks for unbanked New Yorkers striving for greater economic prosperity and control over their finances. Fortunately, this no longer has to be the reality for so many families in our community.

Electronic payment technology has the potential to help financially underserved families navigate around the roadblocks associated with living outside of the financial mainstream. The right payroll or prepaid card can allow individuals to receive wages through direct deposit and avoid check cashers, and pay their bills online rather than purchasing money orders. There are also numerous smartphone apps that link to cards, allowing users to manage their money right from their mobile device.

The tide toward greater financial inclusion has already started to change. Over the last two years, the percentage of households that are unbanked decreased across the nation and within the New York City area. And at the same time, the percentage of households using prepaid cards has increased substantially with the largest increase observed among unbanked households.

Throughout my 14 years as Bronx Borough president, I witnessed the positive impacts of public transportation on my local community, providing the means to pursue employment, education and other opportunities wherever they may be. I firmly believe that electronic payment technology holds that same potential to create economic opportunities for financially underserved families in the Bronx and across the New York City area, while also helping them move beyond costly alternative services.

That is why I am involved with Master Your Card: Oportunidad, a community empowerment program that provides education on how people can use electronic payment technology to better access and manage their money, choose the right option for them and plan for the future. And this education can start early. For instance, Master Your Card partnered with EverFi, an education technology company, to bring an online, technology-based financial education program into grade and high schools across the country, including here in the Bronx.

In recent years, we’ve come a long way in making financial resources accessible to more families within the Bronx and our entire New York City community, but the journey is not yet over. With affordable electronic payment technology, our destination to full financial inclusion is within sight.

Fernando Ferrer, former Bronx Borough president, is acting chairman of the Metropolitan Transportation Authority and a member of the Master Your Card: Oportunidad Advisory Board.

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