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Using data from the 2021 Survey and Diary of Consumer Payment Choice, this article investigates two questions: What payment instruments do consumers without bank accounts adopt? How do these consumers make payments?

Key findings:

  1. Consumers without bank accounts rely heavily on cash for purchases, bill payments, and payments to other people.
  2. Consumers without bank accounts are about half as likely to have set up nonbank payment accounts like PayPal, compared to consumers with bank accounts.
  3. Compared to banked consumers, unbanked consumers adopt different types of special-purpose prepaid cards. They are more likely to have cards related to receipt of income, including payroll cards and cards for receiving government benefits.
  4. Consumers without bank accounts report using bank account–linked instruments to make payments, perhaps due to payments access provided by friends and family.

Center Affiliation: Economic Survey Research Center

JEL classification: D63, E42, J15

Key words: Unbanked consumers, payment choice, payment card adoption, payments inclusion


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