HELTENHAM TOWNSHIP, Pa. (WLVT) - Dahmir Bishop, a West Philadelphia resident who graduated high school this week, doesn’t have a bank account, so he cashes the checks he receives from his job.
“I’m only in high school, so I don’t have a career that’s really that important that I have to do direct deposit,” Bishop said. “So I just come and I cash [my] checks.”
Bishop said he cashes checks up to five times a month. And each time, he pays a fee of between $20 and $30.
Bishop isn’t alone.
Nearly a quarter (23.5 percent) of Pennsylvanians are unbanked or underbanked, according to nonprofit Prosperity Now. In Philadelphia, that number rises to 35.1 percent.
There are a few reasons people don’t use banks. Some can’t get a bank account because of poor credit or previous bounced checks. Others fear their money isn’t safe in a bank.
“The unbanked are unbanked because they’re either not allowed to get an account or they’re choosing not to because they’re scared,” said Stephen Harkey, chief marketing officer for ViVi Holdings, a company that provides financial tech services to the unbanked and underbanked.
Some people bypass banks to get their money more quickly; while a check can take days to clear in a bank, check cashing services offer immediate cash.
“I need my money today, my car notice is due notice, my shutoff notice is today,” said Charles Andrews, a resident of Mt. Airy. “I need my money today.”
But cashing checks is expensive. Fifty-five percent of unbanked and underbanked Pennsylvanians pay check cashing fees of up to $50 a check, according to an online survey conducted in March by ViVi Pay, a subsidiary of ViVi Holdings.
“If somebody is cashing a check for $300 or $400, they’re a low income earner, and it’s costing them $30 to cash that check, that’s ridiculous,” Harkey said.
Transferring funds online is cheaper, but usually requires a credit card or bank account. While digital money transfer platforms like Venmo and Paypal have become a popular way to transfer funds through smartphones, the majority of unbanked individuals reported in the survey that they still had no way to transfer funds electronically.
Fintech companies are now looking for solutions to help the unbanked pay less to access their money and make payments electronically. ViVi Pay has launched a smartphone app that doesn’t have to be linked to a bank account. The app includes a digital wallet app that acts like a bank, but doesn’t require a credit check or minimum balance. The digital wallet is linked to a debit card that can be used to shop and pay recurring bills. Users can deposit checks directly into their account, for free.
“If you had ViviPay you could be part of the cashless economy,” Harkey said.
Dahmir Bishop said he would consider depositing checks through an app in the future rather than cashing them for a fee.
“Using the app would come in handy because I won’t have to go out of my way during the day and I can just go on my phone,” Bishop said.
Harkey said Fintech apps like his can bring financial inclusion to everyone, even those without bank accounts. And most importantly, he added, they give people access to banking services like check cashing without huge fees.
“It gives them basically a full bank account without the cost of it,” he said.
