The portion of the population that relies heavily on cash is seeing new ways to use more mainstream financial services, including methods to better load cash onto stored-value cards.
Over the past several months, Boom Financial and PayPal Inc. have extended efforts to make loading cash onto card products easier. For example, PayPal lets users load cash through Green Dot MoneyPak cards, through a similar PayPal-branded card, and even through Coinstar machines.
While these efforts allow consumers to transfer cash onto one specific card product, Fuze Network, a two-year old startup, allows people to give cash to an agent and transfer that money onto any credit, debit or prepaid card in their wallet.
"The overarching piece is that [Fuze] is trying to enable financial transactions that non-traditional consumers want to do," says Jim Wells, president at Wellspring Consulting International.
The payment market has hit an inflection point, where financial institutions and startups must realize the traditional deposit-based banking is being left behind for more transaction-based financial services, Wells says. And these consumers aren't underbanked or unbanked, he says, but rather "debanked" – the people that walked away from the banking industry between 2009 and 2011.
But being debanked doesn't necessarily mean relying only on cash.
"Consumers have multiple cards – on average five or more – and use them for many reasons," says Dave Wilkes, CEO of Fuze Network.
These cards do not have a common access point. Bank debit cards receive funds at a branch, whereas prepaid cards receive funds at a retailer, for example.
"Fuze solves the problem of disconnected payment networks making it simple to put money on any card via swipe at a retailer's POS" terminal, Wilkes says in an email.
Consumers can make these cash-to-card transactions at more than 150,000 locations, including Pay-O-Matic, ACE Cash Express and Fidelity Express. Last year Fuze handled 3.5 million transactions, processing $250 million in volume. The company will launch the service for ATMs later this year.
Fuze reloads cost $3 and most transactions are posted within 24 hours. Same-day services from other companies might cost $10, says Wilkes, and while money orders are cheaper, they are also slower.
Fuze relies on its network partners to make quick Automated Clearing House (ACH) transfers, which are inexpensive, he says.
"You pay for ACH in nickels and dimes; people forget that," Wells says. Consumers "think the charges banks are levying are because they have to."
Fuze's use of established retail locations also helps its costs, Wells says.
"Fuze comes to the market as a volume play and doesn't have to make a lot [of money] on every transaction," he says. Fuze "is making smart use of the electronic payment system that is available to banks but it just doesn't bring the mammoth cost structure with it."
Fuze's rivals are also attempting to make better use of existing infrastructure.
A part of its point-of-sale push in 2012, PayPal partnered with MoneyGram International Inc. to allow consumers to withdraw and deposit cash at MoneyGram locations into their PayPal accounts. PayPal's pact with Discover last year will allow PayPal's digital wallet to be an option at the point of sale with any merchant that already takes Discover cards.
PayNearMe Inc. announced PayNearMe Express in mid-January. The company provides a payment slip consumers can bring to one of the 7,000 7-Eleven or 1,600 ACE Cash Express locations. That location takes the slip and accepts the cash payment on behalf of the PayNearMe merchant.
Fuze, of Salt Lake City, also offers a service called Swipe2Pay, which enables retailers and bill-payment centers to use their point-of-sale terminals to accept cash payments of card bills.