April is Financial Literacy Month in the United States and financial institutions, the media and consumers have been talking about the importance of financial education for people not only in America, but all over the world. A recent PayPal survey of consumers and experts in Brazil, India and the US found that that 70 percent of the consumers surveyed believe that the financial system benefits certain groups over others, is complicated and is not affordable for all. And less than 40 percent of respondents said they feel optimistic about their personal finances. The majority of consumers surveyed see three key barriers to full financial participation: a lack of education about financial services, the high cost and limited transparency around fees, and insufficient product offerings.
Several elements contribute to a person’s financial health – from the day-to-day financial management of income and expenses, to taking care of family members, to building resilience to financial ups and downs, and taking advantage of opportunities to improve financial security and mobility. For many, managing financial health can be challenging, if not entirely impossible – some of the simplest transactions, such as cashing a paycheck or sending money to loved ones overseas can be inconvenient, time-consuming and prohibitively expensive.
The challenge is clear, and here at PayPal, we’re committed to harnessing the power of technology to offer a global payments platform that enables affordable, convenient and secure financial services that allow everyone to participate fully. We believe affordable financial services and the ability to move and manage money should be a right for all, and not a privilege for the affluent.
PayPal is steadfast in our commitment to product innovations, services and alliances that seek to help alleviate the challenges faced. For example, through our recent
acquisition of Xoom, PayPal and Xoom are powering international remittances to places like Mexico, India and the Philippines where moving money can often be time-consuming, expensive and sometimes insecure. We recently announced our intent to expand Xoom to Cuba by the end of the year, and we’re optimistic about the potential of digitally-enabled remittances to make a difference in the financial health of Cubans.
Additionally, for entrepreneurs and SMBs, our
PayPal Working Capital program leverages data analysis of our merchant’s previous PayPal transactions to offer business loans with flexible payment schedules and one affordable, fixed fee to help them grow their enterprises more quickly and affordably. Interestingly, in the US we’re finding that PayPal Working Capital is stepping in to provide loans to businesses that have struggled to access finance since the financial crisis.
Research shows that nearly 25 percent of PayPal Working Capital loans in the US in 2014 were disbursed in counties that have experienced a loss of 10 or more bank branches since 2008.
Finally, we’re working to enable FinTech innovations with the potential to extend solutions to underserved populations around the world. We recently announced the
global expansion of our relationship with Village Capital, which will help approximately 40 FinTech social impact startups in Latin America, the US and India. As part of our collaboration, PayPal employees in each market will offer their skills and expertise to the participating ventures by serving as speakers, ongoing program advisors and one-on-one mentors.
While 76 percent of the experts we surveyed agree that technology is enabling positive change in the financial system, to truly improve the financial health of individuals and businesses will require the entire ecosystem of financial institutions, network providers, technologists, governments and the social sector to work together to remove the barriers that prevent so much of the world’s population from participating fully in the financial system. PayPal will continue to develop products and services to ease the burden of money movement and management, and work with leaders across the ecosystem to raise the level of financial health globally. Find out more about what PayPal is doing to support
financial health and participation, and take a look back at additional perspectives on financial health and education from industry experts on
PayPal Stories.