RWP 24-09, September 2024
U.S. households that lack digital means of making and receiving payments cannot participate fully in an increasingly digitized economy. Assessing the scope of this problem and addressing it requires a definition of households that are underserved in digital payments. Traditional definitions of households underserved in the banking system—those that are unbanked and those that are underbanked—are not suitable because they do not account for the ownership of nonbank transaction accounts that can be used to make and receive digital payments. In this paper, we define households underserved in digital payments by considering four key elements—access, use, safety, and affordability—and discuss how researchers may assess these elements to quantify the share of households underserved in digital payments.
JEL classifications: D12, D18, G21, G23
Article Citation
Greene, Claire, Fumiko Hayashi, Alicia Lloro, Oz Shy, Joanna Stavins, and Ying Lei Toh. 2024. “Defining Households That Are Underserved in Digital Payment Services.” Federal Reserve Bank of Kansas City, Research Working Paper no. 24-09, September. Available at External Linkhttps://doi.org/10.18651/RWP2024-09
References
Toh, Ying Lei. 2023. “External LinkHow Much Do Nonbank Transaction Accounts Improve Access to Digital Payments for Unbanked Households?” Federal Reserve Bank of Kansas City, Payments System Research Briefing, November 29.
Toh, Ying Lei. 2021. “External LinkWhen Paying Bills, Low-Income Consumers Incur Higher Costs.” Federal Reserve Bank of Kansas City, Payments System Research Briefing, November 23.
Greene, Claire, and Oz Shy. 2023. “How U.S. Consumers Without Bank Accounts Make Payments.” Federal Reserve Bank of Atlanta, Policy Hub, no. 1-2023. January. Available at External Linkhttps://doi.org/10.29338/ph2023-1