WASHINGTON — Electronic payments have already started helping low-income consumers manage money.

But if financial institutions, community organizations andgovernment collaborated, they could help them so much more,according to a panel of academics, payment executives and communityleaders who convened at the National Press Club July 17 to discussnew research released by J. Phillip Thompson, Ph.D., associateprofessor in the Department of Urban Studies and Planning atMassachusetts Institute of Technology. The event was hosted by TheCenter for Financial Services Innovation and Master Your Card,MasterCard's public education campaign.

Joining Thompson on the panel were Shawn Miles, global head ofpublic policy for MasterCard, and Marla Bilonick, interimexecutive director at the Latino Economic Development Center inWashington.

The panel soon took its conversation beyond Thompson's research,which he had conducted on behalf of MasterCard.

Bilonick said in order to truly understand how importantelectronic payments are to low income people, the perspective ofpayer and payee must be considered. Electronic payments allow thoseconsumers to more easily, efficiently and less expensively paytheir bills, she said.

“It is far easier to make your rent payment or house payment orutility payment electronically than to have to travel across town,wait in line and then pay it by hand in cash or a money order,”Bilonick pointed out. She added low income consumers are much morelikely to make payments on time and keep making them on time whenthey can be done electronically. Those payments, in turn, can helpthem improve or build credit history.

Her organization's low income entrepreneur clients reducedrobbery risk with electronic payments, she said, and also grewtheir client bases and found record keeping much easier. Later inthe discussion, Bilonick expressed hope that financial institutionsand other remittance providers could coordinate with credit bureausto include regular remittance payments in income verification andcredit scores.

The panel agreed lower income consumers needed more educationabout security concerns and measures taken to protect cardholdersfrom losses in case of fraud, but Thompson pointed out thatsecurity, from a low income point of view, was relative.

If a low income cardholder lost $500 due fraudulent transactionsmade on his or her card, the funds would be returned after thetheft was reported. However, if $500 was lost in a mugging or otherrobbery, that money was probably gone forever.

Thompson also pointed out safety concerns in many poorneighborhoods had driven out many small businesses. Wider use ofelectronic payments offered the promise of seeing small businessreturn to some of these neighborhoods, he said.

In other dramatic examples of the impact electronic paymentscould have, Thompson related how some of the people put most atrisk from Hurricane Katrina and Superstorm Sandy had not left thestorm zones in time because they had been waiting for theirpaychecks.

Further, he said people stranded on roofs by Hurricane Katrinaflooding lacked both a working cellphone and a creditcard.

“If you had a cellphone and a credit card,” Thompson said, “youwere able to call a service and order a chopper to come and pickyou up.”

The panel pressed that the point that electronic payments couldmake a larger impact on the lives of low income people if financialinstitutions, community organizations and government were more opento the possibilities.

For example, Thompson said New York City renters depositedroughly $2 billion into security deposit accounts on theirapartments, and those funds remained there unused.

“These deposits are not counted as savings. Why not?” Thompsonasked. He added many of the buildings are in need of retrofittingfor improved energy use. Government, community organizations andfinancial institutions partner to find a way tenants could accessor leverage those security deposits, usually a first and lastmonth's rent, to make those needed upgrades, improving theapartments and lowering their utility bills, he said.

Jeanne Hogarth, vice president of policy for CFSI, moderated thepanel. About 60 executives from financial organizations, communityorganizations and government agencies attended the event.